When talking to home buyers about ordering their home inspection, some express confusion, and think the home inspection and the appraisal is the same report. Some borrowers think the bank will order the "inspection" for them.
An appraisal is NOT the same as the home inspection.
An appraisal determines the value of your property, in other words, what your home is worth. The appraiser will compare the age, number of rooms, amenities, and square footage to other properties that have recently sold to determine fair market value. Comparison properties are called "comparables" or "comps".
A Realtor prepares a Competitive Market Analysis (CMA) in the same way, but appraisers have additional training, licenses and certifications.
The appraisal does not determine if the home systems (air conditioning, water heater, plumbing, etc.) function properly, only that they exist. If you are borrowing funds to purchase a home, the appraisal is a requirement by the lender.
If the house does not appraise, a clause in the purchase contract protects the borrower from paying MORE than appraised price for the house. The purchaser can OPT to pay more for the property than appraised price, but the funds cannot be borrowed. The buyer and seller may renegotiate the sales price if they desire, or the borrower can simply cancel the sales contract.
A home inspection, although optional, is highly recommended. The licensed inspector looks for evidence of roof leaks, plumbing leaks, wiring not to code, safety and mechanical issues, etc. that may affect the functionality of the property and cause expense in the near future.
The home inspector will provide a written report to the buyer stating the condition of the home.
The appraiser provides their evaluation to the LENDER. In Mississippi, the borrower can request a copy of the appraisal from the lender.
If you have any questions regarding Mississippi real estate, or which to sell or purchase a property in the Brandon, Flowood, or Pearl area, I'd be more than happy to assist.
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