The Difference Between an Inspection and an Appraisal

The Difference Between an Inspection and an Appraisal

When you decide to buy your first home, you may encounter several terms and conditions that are unfamiliar. While you might have a basic understanding of what an inspection is, you might not know why it's necessary or how it differs from an appraisal. To clarify, here's an explanation of each and their significance for you as a homebuyer.

Home Inspection

Once you’re under contract on a home you wish to purchase, obtaining an inspection is a crucial step in the process. An inspection provides a detailed understanding of the home's safety and overall condition, which is vital for such a significant investment. As a recent article explains:

"A home inspection is something that protects your financial interest in what will likely be the largest purchase you make in your life—one in which you need as much information as possible."

If the inspection reveals any concerns—such as the roof's age, the HVAC system's condition, or other issues—you have the opportunity to negotiate repairs or other solutions with the seller before finalizing the transaction. Your real estate agent will support and advocate for you during this process.

Home Appraisal

While an inspection assesses the home's condition, an appraisal determines its value. As Bankrate explains:

"When buying or selling a home, an appraisal verifies that the sale price of the home is in line with fair market value. This ensures the homebuyer doesn’t pay more than the home is worth, and the mortgage lender doesn’t lend more than it is worth."

Regardless of the price you are willing to pay for a house, if you’re using a mortgage to finance the purchase, the appraisal protects you from overpaying and the lender from overextending credit.

If there is a discrepancy between the appraisal value and the agreed-upon purchase price, your real estate professional will assist in navigating any additional negotiations to address the difference.

Bottom Line

Inspections and appraisals are distinct but equally important steps in the home-buying process, and you don’t have to handle them alone. Connect with us today to receive expert guidance from start to finish.

Kevin Copeland - Broker/Owner, Jefferson Real EstateKevin Copeland

Email[email protected]

Cell Phone: 970.368.0025

Office Phone: 719.838.7001

Post a Comment