What Is the Difference Between a Home Appraisal and a Home Inspection?
Home appraisals and inspections are both important steps to take when buying or selling a home, but what is the difference? These two processes might sound the same, but they have different goals.
A home appraisal takes place before the seller puts the house up for sale. An appraiser will let the buyer know how much their home is worth, depending on a variety of factors. Usually, the seller will make some adjustments to the house before the appraisal to increase the value.
Home inspections take place before the buyer fills out the last bit of paperwork. The inspection is done with the buyer’s interests in mind, and the inspector will look for anything wrong with the house that could potentially lower its value.
Home appraisals are required by lenders in order to protect their investment. Inspections, on the other hand, are requested by the buyer, and they might not even request one. Housing markets are so competitive now that they might push the sale through just to get the home. Appraisers and inspectors look for a lot of the same things. We’ve explained the process of both below, starting with the one that comes first in the real estate process: the appraisal.
The Home Appraisal Process – What Do They Look For?
The owner of the house will have to schedule and pay for the home appraisal, and the results will be sent to the lender. You will need to ask for a copy because you won’t automatically be given one. This report will help you avoid problems during the inspection later on.
According to the appraisers at Home Appraising Group, home appraisers in NJ, the main factor that will be considered by a home appraisal expert is how your home compares to similar homes nearby that have sold in the past 90 days. These are known as comparable sales. Features that will be compared include the appearance, square footage, and amenities.
If your house has one more room than a similar house, that will raise the value, and if you have wallpaper instead of painted walls, that will lower the value. The more work the new owner will have to do after buying, the lower the value of your home.
What to Do with the Results
If you get a great appraisal that exceeds your expectations, then you’re in an ideal situation, and you probably can just go ahead with the sales process. However, if you receive a low appraisal, there are steps you can take to raise the value or dispute the appraisal.
By asking for a copy of the report, you will see exactly what lowered the value of your home. This report will give you a list of things you can improve about your home before moving on with the sale.
If you think the appraisal was wrongfully low, you can ask your real estate agent to look for different comparable homes that support your argument of a higher valuation. They might know more about your area than the appraiser does.
The Home Inspection Process – What Do They Look For?
Inspectors will do a more thorough search of your home. They’re looking for anything that could possibly be wrong on behalf of the buyer. Most of what they look for is behind the walls and under the floors.
They will check for things like plumbing issues, pest infestations, HVAC problems, faulty electrical wiring, and general damage. Unlike appraisers, they do not care about the appearance of your house. A lovely looking house can still have safety issues. Inspectors are looking for major problems that the seller should fix. Small issues can be left to the buyer.
If you want to get the home inspected before the buyer requests it, you can schedule your own inspection and fix any issues ahead of time. This will speed up the process when you’re closing the sale.
What to Do with the Results
The worst-case scenario is for the buyer to walk away after the inspection. This means the seller will have to put the home back on the market and explain why the previous buyers walked away. It’s almost guaranteed to affect the value of the home.
The next best scenario is that the buyer opens negotiations. If there are health and safety issues, the seller will have to pay to get them fixed. The value of the home won’t change, but repair costs will lower your overall return.
The seller can also refuse to make the repairs. If there are people lining up to buy the home, the most cost-effective option for the buyer could potentially be to move on to a different buyer. The people waiting in line might be happy enough to get the home after being denied initially that they will be willing to make the repairs themselves.
You’ll likely need to go through both processes when selling your house. Do some research into the most common problems during home appraisals and inspections. If you can fix those common issues, you’ll be less likely to have problems down the line.
Jennifer Bell is a freelance writer, blogger, dog-enthusiast and avid beachgoer operating out of Southern New Jersey