[vc_row][vc_column][vc_column_text]When you apply for a mortgage, an unbiased appraisal (required by the lender) is the best way to confirm the home’s value based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.[/vc_column_text][vc_column_text][/vc_column_text][vc_column_text]
Appraisal Versus Inspection
What’s the Difference between an Appraisal and a Home Inspection?
Many new buyers ask, what is the difference between an appraisal versus an inspection. If you’re planning to buy a home along the Emerald Coast, an appraisal is an essential step in the process. It is a professional evaluation of the market value of the home you’d like to buy. In most cases, the lender will order an appraisal to confirm or verify the home’s value before lending a buyer money for the purchase. It’s also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction. Here’s the breakdown of each one and why they’re both critical when buying a home.
The National Association of Realtors (NAR) explains:
“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”
When you apply for a mortgage, an unbiased appraisal (required by the lender) is the best way to confirm the home’s value based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.
This is especially critical in today’s sellers’ market, where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.
However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.
Here’s the key difference between an appraisal and an inspection. MSN explains:
“In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”
The home inspection is a way to determine the current condition and safety of the home before you finalize the sale. The inspection report addresses if anything is questionable the process. Some examples of issues that could arise could be the age of the roof, the state of the HVAC system, or just about anything else. You, as a buyer, have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.
The appraisal and the inspection are critical steps when buying a home, and you don’t need to manage them by yourself.
Do you have further questions regarding the appraisal process and the home inspection process? To learn more, reach out to our team. With two office locations, Life’s A Beach Real Estate located in Panama City Beach. And Life’s A Beach Luxury Real Estate located in Destin. We are here to answer your questions and help you find your piece of paradise.