The Difference Between an Inspection and an Appraisal

When you decide to buy your first home, you may come across a number of terms and conditions you’re not familiar with. While you may have a general idea of what an inspection is, maybe you’re not sure why you need one or how it’s different from an appraisal. To keep it simple, here’s an explanation of each one and what they mean for you as a homebuyer.

Home Inspection

Once you’re under contract on a home you’d like to buy, getting an inspection is a key part of the process. A overall inspection is always advised and costs the buyer generally anywhere between $600-$1,500 depending on the inspections needed, such as pool, spa, crawlspace, etc. An inspection gives you a clear idea of the safety and overall condition of the home – which is important for such a big transaction. A recent article explains:

“A home inspection is something that protects your financial interest in what will likely be the largest purchase you make in your life—one in which you need as much information as possible.”

If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. And don’t worry – you don’t have to go through that process alone. Your team at Colucci & Co. Realty will be your advocate and negotiate with the seller on your behalf to ensure you are comfortable moving forward.

Home Appraisal

While the inspection tells you about the current state of the house, an appraisal gives you its value by a third party licensed appraiser An appraisal typically costs the buyer $500-$700. Bankrate explains:

“When buying or selling a home, an appraisal verifies that the sale price of the home is in line with fair market value. This ensures the homebuyer doesn’t pay more than the home is worth, and the mortgage lender doesn’t lend more than it is worth.”

Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal protects you from overpaying and the bank from lending you more than the home is worth.

If there’s ever any confusion or discrepancy between the appraisal and the agreed-upon price in your contract, your trusted real estate agent (us!) will help you navigate any additional negotiations to try to close the gap.

Bottom Line

The inspection and the appraisal are different but equally important steps when buying a home – and you don’t need to manage them by yourself. Connect with us today so you have 40+ years of combined expert guidance from start to finish. Our team is available and happy to help.