Understanding the difference between appraisals and inspections is important to any
real estate transaction.
Recently someone sent in a great question: “What is the difference between an appraisal and an inspection?”
It’s common to confuse these two things, but knowing the difference is actually very important to any real estate transaction.
First, let’s discuss appraisals. The main purpose of an appraisal is to determine the value of a home. Even though I myself have a solid understanding of market value and have worked with several hundreds of homes, my opinion, or any agent’s opinion, simply doesn’t mean as much as the home value determined by an appraiser.
The lender is the person to whom this appraisal will really matter. Except in the case of cash buyers, the lender is the one supplementing this large sum of money to the buyer for the home purchase.
Also, since they will be using the home as collateral, it is important for them to have a solid grasp of what the value is.
In today’s escalating market, appraisers will look at similar homes while accounting for things like upgrades. Appraisers are looking in areas to help them determine home value. This can cause discrepancies in a forward-moving market like the one we’re in today.
Sometimes these discrepancies will manifest in the form of an appraisal gap.
Moving on, there’s also the matter of the home inspection. Inspections benefit the homebuyer in a number of ways. An inspection will not only alert them to issues within the home, but will also give them a good idea of what home maintenance will be like in the future.
Overall, each one of these processes are integral to getting to the closing table from either side of the transaction.
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If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.
These processes are integral to getting to the closing table.
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