If you have dealt with real estate matters before, then you have probably come across the terms “inspection” and “appraisal”. An inspection is a limited, non-invasive examination of the condition of a home.
On the other hand, an appraisal is an estimation of your home’s value.
If you are searching for a new home, understanding what these two processes entail is key. They could help you avoid the often many minefields that exist in the real estate industry, says the Bigham & Associates team of professionals.
A Home Inspection
This involves checking the physical condition of the home. The inspector works objectively and thoroughly. Typically, this costs an average of around $400, depending on the size of the house.
The goal of a home inspection is to provide the buyer with all the crucial information regarding the physical condition of the home. Professional inspectors will look for a myriad of things. The following are just a couple of them:
- The roof: Among other things, the inspector will check to see whether any openings – like skylights or the chimney – are properly flashed and are free from debris or moss growth.
- Major systems: From heating and cooling systems to plumbing and electrical systems, the inspector will leave no stone unturned.
- The home’s foundation: The inspector will also check the foundation for cracks and other signs of deterioration.
- Basic safety checklist: Here, the inspector will check for safety elements like the ground fault interrupters, smoke detectors, and stairs.
- The exterior condition: The inspector will check to see whether the exterior surfaces are in need and or installed properly.
- Doors and windows: The inspector will also check to see whether doors and windows operate as they should and have any damaged in need of repair.
There are, however, things that a home inspection won’t cover. They include insulation voids, security systems, septic tank goo, cable systems, and refrigerators.
The Inspection Process
Firstly, you need to hire the right person for the job. If you have somebody in mind, great. However, if you don’t, then you may need to do your due diligence before hiring one.
Hire someone local, experienced, has proper certifications, and has great reviews backing their workmanship.
Before the inspection process can begin, your home inspector may require you to sign a pre-inspection contract first. Essentially, the document highlights everything the process will cover.
Typically, a home inspection process takes three or more hours to complete. The final report is also usually available the same day.
A Home Appraisal
A home appraisal is a key part of buying or selling a house. It’s an unbiased, independent assessment of how much a property is worth. The process is conducted by a Licensed Residential Appraiser.
The ultimate goal of the appraisal process is to make sure that the property you are buying is correctly valued. That is one that is valued at or above the price you are paying for it.
Now, there are many factors that influence home appraisal value. They include:
- Nearby features: Biking paths, playgrounds, parks, and other desirable features can help increase appraisal values. On the other hand, power plants, landfills, industrial facilities, and other developments can do just the opposite.
- The current real estate market: Your home will be appraised lower if the market is saturated with the same type of homes. On the other hand, it will be appraised higher if the market is saturated with a ton of buyers and not enough inventory.
- Recent home renovations: Recent home renovations like newly updated kitchens and bathrooms will also contribute to the home appraisal value.
- Storage space: Does your home have ample an amount of space, such as a large attic, a useable basement or large closet? If so, then it will be appraised higher.
Other things that contribute to the appraisal value include the square footage, number of bathrooms, number of bedrooms, curb appeal, age of the home, and location.
Things that can cause a lower appraisal amount include water damage, a lingering odor, drainage issues, peeling paint and cracked tile.
The Home Appraisal Process
First and foremost, the appraisal expert will conduct rigorous research. Among other things, the expert will consider all the comparable properties in the area as well as any desirable features the property has.
This will give the expert a much better picture of what the fair market value of the property should be.
Generally speaking, the process usually takes anywhere between a couple of minutes to a couple of hours. Depending, of course, on the complexities involved.
The average cost of a home appraisal process is about $350. Expect higher values in the larger cities, wherein costs can go as high as $800.
Clearly, a ‘home inspection’ and a ‘home appraisal’ are two different terms that allude to two different processes. Understanding them is key if you are in the market looking for a new home.