Inspections vs. Appraisals: Understanding the Key Distinctions

When you buy your first home, you might encounter several unfamiliar terms and conditions. You may have a basic understanding of what an inspection involves, but perhaps you're unsure why it's necessary or how it differs from an appraisal. To clarify, here's a straightforward explanation of both and what they mean for you as a homebuyer.

Home Inspection

Once you're under contract for a home you want to purchase, getting an inspection is a crucial step in the process. An inspection provides a clear understanding of the home's safety and overall condition, which is essential for such a significant transaction. As a recent Realtor.com article explains:

"A home inspection safeguards your financial interests in what is likely the largest purchase of your life, providing you with as much information as possible."

If any concerns arise during the inspection—such as the age of the roof, the condition of the HVAC system, or other issues—you have the opportunity to discuss and negotiate potential problems or repairs with the seller before finalizing the transaction. Rest assured, you won't have to navigate this process alone. Your real estate agent will act as your advocate and handle negotiations with the seller on your behalf.

Home Appraisal

While an inspection provides information about the current condition of the house, an appraisal determines its value. As explained by Bankrate:

"When buying or selling a home, an appraisal confirms that the sale price aligns with the fair market value. This ensures that the homebuyer does not overpay and the mortgage lender does not lend more than the property's worth."

No matter what you're willing to pay for a house, if you're using a mortgage to finance your purchase, the appraisal safeguards you from overpaying and protects the bank from lending more than the home is worth.

If there is any confusion or discrepancy between the appraisal and the agreed-upon price in your contract, your trusted real estate professional will assist you in navigating any further negotiations to bridge the gap.

Bottom Line

The inspection and appraisal are distinct yet equally vital steps in the home-buying process, and you don't have to handle them on your own. Reach out to an agent today to ensure you have expert guidance every step of the way.