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Claiming that the home buying process is extensive is an understatement. From offers to negotiations and contingencies, there are a lot of moving pieces and processes in place to ensure a smooth sale. And of course, that comes after all the challenging work involved in finding the property you want in the first place. To many, getting an appraisal and inspection may understandably feel redundant. However, they are both essential and here’s why.
The main goal of the appraisal is to fairly determine the value of a property. Completed by a licensed appraiser, held to the highest standards by the Uniform Standards of Professional Appraisal Practice (USPAP), appraisals evaluate the current state of the property and thorough comparisons to nearby, similar properties. The appraisal typically comes into play when you apply for a loan. Lenders will order the appraisal to determine how much they are willing to lend you. Appraisals also can help ensure a fair transaction between the buyer and seller.
Home inspections, on the other hand, directly benefit the buyer and provide valuable information on the property condition. A housing inspector primarily focuses on the structural (foundation, roof, etc.) and mechanical (plumbing, electrical systems, etc.) parts of a property. Before agreeing to purchase a home, a buyer should always want the assurance that the property is in good condition and that they won’t have any expensive undertakings in the future (such as replacing the HVAC systems). Often, in the offer contract, the buyer will make the purchase of the home contingent on a solid inspection.
Clearly, though similar concepts, there are key differences between appraisals and inspections making them both vital to obtain. To learn more about appraisals, visit the “Appraisal” section of our blog. For other helpful investor resources, visit our Resources Page.