Georgina Hunter, a Maui real estate agent provides a great explanation of the difference between a home inspection and an appraisal.
You’re buying a home and things are going great. You found a nice house you love and negotiations led to an accepted offer, congratulations! Things are moving fast and this is the time to pay close attention. Your agent has provided you with names of home inspectors and you need to get that scheduled ASAP. There’s a lot you might not understand, so be sure to ask your Maui Realtor who will be happy to explain things.
What’s a home inspection?
- thorough inspection of the home done by a professional inspector and hopefully certified inspector
- you decide who does the inspection
- functional things are tested, including plumbing and electrical systems and appliances
- structural things like roofs and foundations are observed and inspected
- repairs needed will be noted; upcoming issues will be noted; safety and health hazards will be noted
- you pay for this inspection which can often be paid at closing through escrow
- the report benefits you, and you may or may not want to share it with the seller
- detailed report will be provided to you within a few days, advising you on matters that might affect your decision to buy
What’s an appraisal?
- valuation of the home done by a professional appraiser working in conjunction with the lending institution
- the lender/bank decides who does the appraisal
- value is estimated based on square footage and age of improvements to the home and lot
- comparable properties from the nearby area are included in the report
- you pay for the report by way of your loan application, and usually not upfront
- the report benefits the bank as it helps them decide how much money to lend you
- detailed report will be provided to your lender, usually within a week, giving a valuation of your home on today’s market
Which one comes first? The home inspection should be done right away because it will have an impact on whether or not you are moving ahead with the purchase. Once you know just exactly what improvements or repairs need to be made you can decide to either cancel the purchase or keep going. The degree of repairs might lead you to try and negotiate the work or the purchase price with the seller. If you decide to stop the purchase you will need to notify all parties ASAP. If the deal is off, then there is no need to have the appraisal done. Your lender will usually wait for your decision before ordering the appriasal, in an effort to save you some money.
Both the home inspecton and the appraisal are important steps in buying your home. Each one can either float your boat or sink it. Be sure to consult with your real estate agent about each step. When all things go smoothly it will lead to happy buyers and sellers, and that’s the goal when buying a home.
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