What's the Difference Between an Inspection and an Appraisal?
Inspection and appraisal are two important terms that you are sure to encounter when dealing with real estate matters. Basically, an appraisal is needed to determine the estimated market value of a real estate property, explains John Haas of Haas Properties.
The property could be vacant land, commercial property, condominium, or a house.
An inspection, on the other hand, looks at the physical condition of a home.
If you are in the market looking for a new home, understanding what these two terms entail in detail is crucial.
So, what exactly do these two terms entail in detail?
This is the process of determining the value of a piece of real estate. An expert will walk around the property and the surroundings to determine how much the property is worth. The goal of the appraisal process is to ensure that the property you’re buying is valued at or above the price you’re paying for it.
The process takes place before the seller puts the house up for sale.
The process takes anywhere between a few minutes to a couple of hours, of course depending on the complexities involved.
The Home Appraisal Process
The first thing a certified home appraisal expert will do is first carry out thorough research. The expert, among other things, will look at comparative properties in the area.
After doing this the expert will have a clearer picture of what the property’s fair market value should be. Next in the process, the expert will examine both the desirable features as well as the deficiencies.
Examples of desirable features include things like a good location, and improvements done to the exterior of the property. Others include luxuries like well-maintained hardwood floors, granite countertops, and additional bathrooms.
Deficiencies may include things like cracked tile, peeling paint, drainage issues, a lingering odor, and water damage. These will hurt your home’s value.
Finally, the appraiser will write a report and hand it over to the lender. The appraisal process helps ward off fraud and misrepresentation.
For a single-family home or condo, the average cost of a real estate appraisal costs anywhere between $300 and $425. In larger cities, the cost can go to as high as $800.
A home inspection process involves checking the physical structure and systems of a home. The inspector works thoroughly and objectively. The inspection process costs anything between $300 and $500.
The goal of the inspection process is to provide the buyer with all the necessary information to make an informed decision. The following are major things home inspectors look for:
Issues with the HVAC system
Insect and pest infestation
Damaged electrical systems
A home inspector isn’t usually concerned with anything cosmetic in a home. The only exception is if that thing is a safety risk. For instance, water stain or a large crack on a wall.
The Inspection Process
First and foremost, you will need to find the right person for the job. If you don’t have somebody in mind already, ask your real estate agent for help. You could, alternatively, go online and find someone qualified there.
Now, with a list at hand, go ahead and interview them. Having a set of questions can help you in this regard. You could ask them about things like their:
The time the process could take
The tools they use
Next, you may need to sign a pre-inspection contract. Basically, the contract highlights everything the inspection process will entail.
Generally speaking, the entire process takes a couple of hours, and the final report a day or two. Then, you will need to look at the report and consider your options. That is, to repair the issues, negotiate with the seller, or to walk away from the process altogether.
Things Home Inspectors Look for When Inspecting a Property
The following are a couple of questions home inspectors try to answer when inspecting a home.
Can you easily spot the required smoke and carbon monoxide detectors?
Is there sufficient ventilation throughout the home?
Do windows and doors operate properly?
Are there stains or other damages on the floors?
Are there any strange odors coming from inside the home?
Is the exterior paint-stained, peeling, or faded?
Are there cracks or shifts in the foundation at the base of the walls and ceiling?
Is the roof functioning as it should?
Just make sure to do due diligence when hiring one for the job. Find one that is reputable, qualified and experienced.
There you have it. The key difference between an inspection and an appraisal process. Having them both will help give you peace of mind if you are in the market searching for a new home.