When buying your first property, you may encounter unfamiliar terminology and circumstances. While you may have a rough understanding of what an inspection is, you may be unsure of why you need one or how they differ from appraisals. To make things easy, here's an explanation of each one and what it means for you as a buyer.
Home Inspection
Once you've agreed to buy a home, getting an inspection is an important step in the process. An inspection is crucial for assessing the safety and overall condition of a house before making a significant (usually your largest) purchase. A recent Realtor.com post explains:
“A home inspection is something that protects your financial interest in what will likely be the largest purchase you make in your life—one in which you need as much information as possible.”
If anything during the inspection process raises concerns, such as the age of the roof, the condition of the HVAC system, or anything else, you have the option of discussing and negotiating any potential issues or repairs with the seller before the sale is finalized. And don't worry; you don't have to go through it alone. Your real estate agent will be your advocate, negotiating with the seller on your behalf.
Home Appraisal
While an inspection informs you of the house's current condition, an appraisal determines its value(for the lender). Bankrate explains.
“When buying or selling a home, an appraisal verifies that the sale price of the home is in line with fair market value. This ensures the homebuyer doesn’t pay more than the home is worth, and the mortgage lender doesn’t lend more than it is worth.”
Regardless of how much you're willing to pay for a property, if you're going to utilize a mortgage to finance your purchase, the appraisal keeps you from overpaying and the bank from giving you more than the home is worth.
If there is any question or disagreement between the appraisal and the agreed-upon price in your contract, your experienced real estate agent will guide you through any additional negotiations to close the gap.
Bottom Line
You don't have to handle the appraisal and the inspection on your own; they are two separate but equally significant procedures in the home-buying process. Contact Chris right now to receive professional advice throughout the entire process.
by kcm.com
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