Appraisal v. Inspection … it’s AND not OR

People sometimes wonder if they need a home inspection or an appraisal when buying a home because they think they are pretty much the same thing.  However, there are some important differences. An appraisal is about determining the value of your home.  It is something your lender wants so they know the property is worth what they are loaning you for it. An inspection is about determining the condition of the home and any existing or potential problems it may have.  So, while the appraisal is more for the bank’s purpose, an inspection is to educate the buyer about the condition of the home he/she is purchasing.

Real estate appraisers abide by state established standards and licensing practices and have the background of experience to determine an accurate value of your home.  Several factors are considered in an appraisal.  The location of the home and the quality of schools, medical facilities, and other community features will affect appraisal value. The size of the home, the size of the lot it is on, and the price that comparable properties have sold for will also help determine the appraisal value.  In addition, signs of neglect or poor maintenance such as non-working appliances, damaged flooring, broken windows, etc. will reduce the value of the home.  If you are applying for a mortgage through the Federal Housing Administration (FHA), your appraiser will also assess the condition of the house and any potential problems, but not to the extent or with the training that a home inspector would. 

A real estate inspection is a much deeper examination of the condition of the home and its major systems.  The purpose of the inspection is to reduce the chance of problems popping up to surprise you later.  In Missouri, there is no licensing requirement to become a real estate inspector, so knowledge and experience should be a major requirement when choosing an inspector.  The inspector is primarily looking for anything unsafe, at the end of its useful life span, not working properly, or significantly lacking.  Examples of things an inspector would look for include problems with the HVAC system, structural or foundational issues, plumbing problems, an old or damaged roof, electrical system damage, pest or insect infestation, and water damage. The priority is on identifying health and safety problems first, then significant defects second.

When you make an offer on a house, it is extremely important that the inspector can get to every part of the home to examine it. The more accessible every part of the home is to the inspector the more thoroughly he/she can perform the inspection.  While the inspection is being done for the buyer’s purpose, it is not unheard of for the seller to have an inspection done before listing the house. This allows the seller to discover and correct any issues that may be found and avoid delays in closing on the purchase of the house.

So, when comes to appraisals and inspections, the fact is, you need both.  They perform two different functions for two separate purposes.  To know what a house is worth, or how much a bank will loan on it, you must have an appraisal.  To make sure you know what you are buying and aren’t going to have surprise problems, you will want an inspection.  To ensure your closing goes smoothly it is and, not or, when it comes to inspections and appraisals.  If you are in the process of making an offer on a house and have questions, Arrowhead Title is here to help with expertise and title services from a team who truly believes in excellence and knows that accuracy really does matter. 

Where Accuracy Matters!

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