Understanding What is a Home Inspection and an Appraisal

When it comes to buying a home, two crucial steps in the process are the home inspection and the home appraisal. While these two terms are often used interchangeably, they actually serve different purposes. A home inspection is a thorough assessment of the home's condition, including its safety and current state, which allows the buyer to identify any potential issues or repairs that need to be addressed before finalizing the sale. On the other hand, a home appraisal is a professional evaluation of the market value of the property, which is required by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase.

An inspection helps the buyer understand the home's condition, while an appraisal helps them understand the home's value. If there are any questionable findings during the inspection, such as an old roof or a faulty HVAC system, the buyer has the option to discuss and negotiate any necessary repairs or issues with the seller before the sale is final. Working with a trusted real estate agent can help facilitate this process.

When applying for a mortgage, an unbiased appraisal is required by the lender to confirm the value of the home based on the sale price. The appraisal protects the buyer by ensuring that the bank doesn't loan them more than what the home is worth. This is particularly important in today's seller's market, where low inventory is leading to an increase in bidding wars and driving home prices upward. However, the lender will only allow the buyer to borrow based on the value of the home, which helps keep home prices in check.

In the event of any confusion or discrepancy between the appraisal and the sale price, a trusted real estate professional can help navigate any additional negotiations in the buying process. Ultimately, both the inspection and the appraisal are critical steps when buying a home, and it's important to work with a real estate professional to get the expert guidance needed to navigate the entire homebuying process.