FAQ ~ Doesn't the Bank Order My Home Inspection?

By
Real Estate Agent with Front Gate Real Estate Broker 11085

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.

New construction homes for sale

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.

Comments (5)

Monique Ting
INET Realty Honolulu, HI - Honolulu, HI
Your agent under the sun

Pat, isn't it amazing to find out that some people just have no idea what the steps of a home purchase are? As realtors, we are so used to it that sometimes we forget that these are not common knowledge.

Have a great weekend and 4th of July!

Jun 30, 2017 07:13 PM
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Although the internet has given people all kinds of infomation it is vey clear they still need us to explain it all.

Jun 30, 2017 10:37 PM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

Buyers get so confused about the appraisal and home inspection. The mix up the terms and don't know they ever get it straight in their minds.

Jul 01, 2017 07:48 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Pat good job on explaining the difference between an appraisal and a home inspection.  Many Buyers are surprised when I tell them that I think a home inspection is a great idea, and I would not purchase a house without doing one.  But lenders do not require them as part of the loan process.

Jul 01, 2017 07:17 PM
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

Wonderful explanation of the difference, Pat! I find that this is often confused by buyers and sellers as well. I feel like I've always understood the difference but, I'm sure I was as confused as some before I got into the business!  LOL

Hope you have a fabulous Fourth!

Jul 03, 2017 07:34 PM