Inspections vs. Appraisals
It's easy to understand why inexperienced buyers
use "appraisal" and "inspection" interchangeably when discussing a real estate purchase. Both ordeals involve a licensed professional visiting the property to judge its worth. The subsequent reports, however, serve two very different purposes
How they differ
Appraisers essentially walk through and note any major, obvious flaws that affect the market value. Inspectors, on the other hand, do more than a cursory glance. They spend several hours checking the property's current condition and assess potential risks for the prospective purchaser. Inspections even consider areas such as cosmetic damage and pest infestation.
Appraisers utilize two types of information when drafting their report -- personal observation and comparable sales in the specific township. Unlike home inspections, appraisals are conducted for the benefit of the lender. Lenders confirm that the asking price matches appraised value before approving the buyer’s mortgage; they will not take the home inspection into account.
How they coincide
Neither professional is paid off commission, so expect them to impartially check the following:
- verified address
- number of rooms
- window in each bedroom
- distinct visible damage
- value add-ons (pools, patios, etc.)
- square footage of home
- heating/cooling systems
Do you need both?
Yes. Any real estate agent
will suggest a home inspection for buyer and seller alike. A seller hires an inspector before
placing their home on the market to nip any huge issues in the bud. Buyers rely on inspections before commitment to understand and limit legal liability. Appraisals are sometimes a legal obligation and lender requirement to validate the home as sufficient collateral for the home amount.