A common question is if both a home inspection and appraisal are required when purchasing a home? Although these are both important steps and can uncover details about a home’s condition and value, it is good to distinguish the difference between the two before that stage of the home buying process.
Home appraisals are typically done by a professional to establish the market value of the property. Home appraisals are usually required by a lender as a prerequisite for a mortgage approval, or in some cases where real estate is being used to secure a loan.
An appraisal will provide information such as the overall condition of the property, the neighbourhood, and variables that contribute to the sale of the property. It may be used as a comparable sales analysis, or an assessment of value.
A home inspection is not used to determine the value of a home but rather an assessment of the physical condition of a property. It entails a comprehensive visual inspection of a home and all its major systems. Often times an inspector will provide a list of estimated costs associated with the homes repair that are required to be done. Home inspections better assist home buyers in a decision.
In summary an appraisal is intended for the lenders satisfaction to decide on mortgage financing, while a home inspection is for the satisfaction of the potential home buyers. An appraisal in some cases can be a mandatory condition to financing, while a home inspection is an optional choice. For more information contact us.