Appraisals Vs Inspections
Appraisals and Inspections... Both are important conditions in purchasing a home; however, they can often get mixed up in understanding their purpose in the transaction. In this short 3-minute video, Kendra explains the differences between an inspection and an appraisal, check it out below!
In short, both an appraisal and an inspection are important conditions in an offer, and both serve an important, yet unique purpose.
The inspection contingency is for the buyer's knowledge / understanding of the condition of the property. The inspection report is conducted by a state licensed inspector and is typically 25 - 50+ pages of the home condition - including key areas like plumbing, electrical, mechanical functions, exterior & interior condition and other components that affect the lifespan of the property.
The inspection is often at the expense of the buyer and due at the time of the inspection or shortly after. The inspection helps the future owner understand the current condition which may allow for negotations during the transaction, or in other cases, providing insight to future projects that may need to be addressed during homeownership.
The appraisal contingency is often required if the buyer is purchasing a home with a loan. The appraisal contingency allows the bank to be aware of the property's condition and to verify the valuation is appropriate for the loan amount. In the event the buyer stopped making payments, the bank wants to be able to sell the property to recoup their loaned amount.
The appraisal does consider some items relative to the condition that pertain the safety, this is often more pertinent with government loans (FHA, VA, USDA, etc.). A state licensed appraiser will conduct a site visit to confirm the condition of the home and take measurements of the rooms to verify size and square footage (as square footage is an important factor to most appraisals). From there, they'll use market comparable properties available via the MLS, to support an appraised price they'll present to the bank in a formalized appraisal report.
We could go on and on, but to keep things breif, that sums everything up! If you have questions or thinking about moving, our team is here to help! Drop us a message below.