Home Appraisals vs. Home Inspections: Understanding the Difference

Explaining the difference between home appraisals and inspections.

Home appraisals are often confused with home inspections, but the two processes serve different purposes in the home-buying process. A home inspection is optional and involves evaluating the property's systems and structure. A qualified inspector checks for safety issues, potential repairs needed, and other relevant factors before the purchase. In contrast, appraisers assess the value of the home to ensure the loan amount is appropriate. If you're buying a home with a mortgage, an appraisal is mandatory. Here are a few key points about appraisals:

1. They are conducted by professionals. Appraisals are done by people who are specifically trained in evaluating real estate values.

2. Physical assessments aren’t always necessary. Some appraisals are done in person, while others can be conducted through drive-by assessments or desktop appraisals using property records and local sales data.

"If you're buying a home with a mortgage, an appraisal is mandatory."

3. They can impact your mortgage amount. Lenders want to ensure they can break even if the home goes into foreclosure, so they typically won't lend more than the home's total appraised value. If the home's appraised value is lower than expected, you may need to cover the difference out of pocket, renegotiate with the seller, or reconsider the transaction altogether. Also, buyers typically pay for the appraisal as part of their closing costs and the price can vary.

If you have any questions about appraisals or the buying and selling processes, please feel free to call or email me anytime. I would love to help you!