Buyers and sellers are often confused about the difference between a home inspection and an appraisal. The home inspection and appraisal are two different functions of a real estate transaction with different goals.
The inspection is an optional part of the transaction. You can choose to have a home inspection and make that part of your offer, or you can forgo that option if you wish. The purpose of a home inspection is to find material defects and safety issues in the home.
Often people consider skipping the home inspection because it isn’t required and they don’t want to spend the money. It is good to remember that a home is likely the largest purchase you will make in your lifetime. And, $300 is a drop in the bucket compared to spending your first night in the house when the furnace isn’t functioning.
If you are using financing, an appraisal is a requirement to get your mortgage. Appraisers are chosen by a third party and the lender will not know who the appraiser is until the report is completed. The job of an appraiser is to confirm the value of a property is at or above the agreed upon purchase price. How they do this is by looking at comparable sold properties. They will likely be looking at properties that have sold in the same town or similar towns in the past six months with as close to the same attributes to the subject property as possible.
Once the appraiser has completed their report they will submit it to the lender and the underwriter will review it for any errors or items that need to be addressed. Some financing programs have certain criteria that a home must meet. A competent realtor will know the criteria for your loan and will have let you know if they foresee any issues with the appraisal prior to going under contract.
It is important that you are educated on the purpose of each step of the home buying or selling process, and these are two of the most important.
Cari Turnbull is a Windham resident. She and her team represent buyers and sellers in the Greater Portland area. For all your real estate needs contact Cari email@example.com