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Home Inspections and Appraisal Inspections – What’s the Difference?

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Home Inspections vs. Appraisal Inspections

If you are buying your first home, or if it’s been a while since you have, you may not know (or remember) what the difference is between a home inspection and an appraisal inspection. Our new home-buyers often ask for an explanation of the differences. Simply put, a home inspection only covers the physical condition of the structure and it’s major systems, while an appraisal inspection is part of the loan application process.

Home Inspection

Home Inspection

Home Inspection: Once you make an offer and have that offer accepted, you’ll hire a licensed home inspector who will visually and physically inspect the home and all of its major systems, such as the doors, windows, (some) appliances, plumbing and electrical systems, floors, walls, attic, and the entire interior – including the garage – and exterior of the home. Some will inspect roofs, pools and other exterior structures and components and there are important restrictions and limitations that are not covered. A good inspector will lay out the scope of the inspection before beginning the work, and will explain everything – including describing what is, and is not, included – to the home buyer who should always be present at the inspection.

At the end of the inspection, the inspector should review his/her findings with the buyers so they know the major and minor issues found during the inspection, what repairs might be needed, what deferred or urgent maintenance items were discovered, as well as, learning where the main shut-offs and service valves and panels are located. A good home inspection provides the the first good look “under the hood” at the home’s physical components and goes far beyond what a REALTOR can observe. Then, the inspector provides a detailed report of the findings, which is then delivered to the buyer for their review.

Appraisal Inspection

Appraisal Inspection

Appraisal Inspection: This is done in connection with the home-buyer’s home loan application. Once the offer is accepted, the loan application process gets ramped up and the loan officer will order a value appraisal. This involves an appraiser physically and visually inspecting the home to evaluate the condition and upgrades of the home, although the appraiser will not run appliances or do any invasive inspecting. The appraiser will take photos and measure the home’s square footage and feed all of the information into an appraisal report which is sent back to the lender for their underwriter to include in the loan application package. The appraiser will also include in the report comparable sale data (a/k/a/ comps) of similar properties to help the lender understand whether the home is truly worth what the buyer and seller agreed to on price.

In summary, the home inspection and appraisal inspection are both related to buying a home, both occur early in the process and both are paid for by the home-buyer, but they are two different processes performed by different professionals for very different purposes. For more details, please contact us for an appointment and we will be happy to explain things further.

Happy home-buying!