What’s the Difference Between an Inspection & Appraisal?
As part of the home selling and/or buying process, you should expect an inspection and an appraisal stage. Real estate properties are products that need evaluations before completing the transaction. However, confusion often arises among home sellers and buyers. That is because both inspections and appraisals assess properties. This is why people want to know the difference between these two stages and why they are necessary.
Although inspectors and appraisers may check the same area(s) in your house, their aims differ. In this article, Cory Real Estate will explain the difference between a home inspection and appraisal.
What is a home inspection?
The home inspection is a crucial stage of the real estate transaction where the buyer or seller invites a qualified inspector to assess and evaluate the physical condition of the property. A buyer may do this to avoid buying a home, only to realize that it has serious issues that will be expensive to repair. Depending on the inspection report, the buyer may decide to renegotiate the price, continue with the purchase, withdraw from the sale, or allow the seller to perform repairs before the purchase.
The home inspector has a checklist of about 1600 items that assess the property's interior and exterior components. These include but are not limited to:
Heating and air conditioning: The inspectors will assess the heating and air conditioning system to check if they function efficiently.
Roof: They will check the roof for leaks, growths, missing shingles, loose tiles, blocked gutters, and loose flashings.
Structure: This will involve an assessment of the support structures, foundation, and slab.
Plumbing: The inspector will check the vents, drainage, and waste system.
Insulation and ventilation: They will inspect the ventilation fans, crawlspace insulation, and vapor retarders.
Interior inspection: The home inspectors will look at the floors, ceiling, windows, doors, walls, counters, cabinets, staircase, etc. They will assess the damages and functionality of all the interior appliances.
Electrical system: Home inspectors assess the electrical system to know if it is appropriate and safe. They will take note of the conductors, distribution panels, grounding equipment, wiring, etc.
How to prepare for a home inspection
If you want to sell your property, it is essential to prepare for the home inspection. Doing so will prevent you from having unwanted outcomes. Below are some tips on how to prepare for a home inspection:
Clean and declutter the entire house.
Remove obstacles from vital areas that the home inspectors will assess. These include the attic, crawlspace, electrical panels, and water heaters.
Unlock the areas that will require inspection. Examples are doors to the basement, attic, electrical panels, and others.
Replace or clean dirty HVAC filters and ensure they are of appropriate sizes.
Turn on the utility supplies and gas pilot lights.
What is an appraisal?
An appraisal is the assessment of a property by certified appraisers to estimate its value. Home appraisers do not assess the physical condition of the property, but they may involve an inspector to know the market value. If appraisers notice issues on a property, they may invite an inspector to check it.
Lenders hire appraisers to evaluate properties to know their fair market values before providing money for homebuyers who need financial aid. The lenders do this to ensure that the home's price is not more than its value. Professional home appraisers look at the following:
Size of the property: The lot and home size are vital to the appraiser. They also consider the number of rooms in the property when estimating the value.
Exterior: They assess the roof, walls, and foundation.
Interior: The appraisers will look at the type of floors, doors, windows, walls, plumbing, and electrical system.
Home improvements: They consider the amenities inside the property such as new appliances, HVAC system, floors, kitchen, and bathroom.
Apart from the features on the property, appraisers also consider the neighborhood. They will compare the property's price to similar homes in the area. For that reason, appraisers may spend between 15 minutes to hours on the property but perform most of the work in their office.
How to prepare for a home appraisal
The outcome of a home appraisal will depend on how the seller prepares for it. If you are selling a home, you may consider the following:
Perform the necessary repairs and renovations.
Keep all the documents and receipts of every repair or maintenance work on the property.
Improve the property's curb appeal.
Let the appraiser know about the renovation or remodeling you have done.
In a nutshell: What's the Difference Between an Inspection and an Appraisal?
A home inspection provides the buyer or seller with an unbiased physical evaluation of the property's physical state, noting features that will require replacements or repairs. On the other hand, an appraisal helps the lender estimate the home's value, ensure it is marketable and meets the minimum standards by FHA.