How are home inspections and appraisals different? Melanie Taliaferro from SWBC Mortgage joins me to explain.
What is the difference between an appraisal and an inspection? Melanie Taliaferro from SWBC Mortgage joins me today to explain this a little more fully.
When you make an offer on a house, there is something called the ‘option period.’ During that time, you have the opportunity to do your due diligence as a buyer. You should always hire a licensed home inspector to come in and do an inspection on the property.
A licensed home inspector will check everything from the roof to the foundation. If there is a major issue with your air conditioner, roof, or any other system in the house, then the home inspector may recommend that you get a specialist’s opinion. The inspector will also give you a 50-page report of everything they found in the home.
Some people use the terms ‘inspection’ and ‘appraisal’ interchangeably, which makes things confusing. However, the appraisal is very different from the home inspection. After you order the home inspection and decide you want to move forward with the purchase, the lender will require you to order an appraisal. This happens after the option period because you have completed your due diligence and decided that you want to buy the home.
During the appraisal, a licensed appraiser will come out to inspect the property. They won’t do a true, detailed inspection like the home inspector did. The appraiser is just there to provide an opinion of the value of the property.
The appraiser will pull comparable sales of similar homes within a half-mile radius from the last six months to see if the purchase price matches the market value of the home. The appraiser looks for similar-sized homes with similar amenities in order to make that decision. The appraiser will then tell the lender whether or not the market value of the home matches the purchase price you and the seller have already agreed upon.
The appraiser may also recommend certain repairs. If something comes up in the appraisal affecting the safety or livability of the property, then the appraisal will be subject to repairs.
Ultimately, although appraisals and inspections are very similar, the appraisal is the biggest piece of our property approval process. The main difference is that the inspection is part of the buyer’s due diligence while the appraisal has more to do with the lending side, getting a loan, and making sure that the investment is worth its value.
If you have any questions about appraisals or the lending side of buying a home, you can reach Melanie at 512-400-0342 or at Melanie@TheTaliaFerroTeam.com. As always, if you have any real estate questions, please don’t hesitate to reach out to me. I would be happy to help you!