If you’re considering selling your home or purchasing a new one, you’ve likely heard the terms ‘home appraisal’ and ‘home inspection’ come up as you familiarize yourself with the buying or selling process.
Both a home inspection and an appraisal are essential elements in most real estate deals. But for new buyers or sellers, it is common for there to be confusion surrounding these two terms. A home inspector and appraiser offer two different services, but both include a thorough evaluation of the home.
It is important to understand the differences between these two service providers, as well as their role in the buying or selling process, in order to be properly informed before you begin.
In this article, we will explore the differences between a home appraisal and a home inspection as well as how to know which is right for you.
What Is a Home Appraisal?
A home appraisal is also occasionally referred to as a real estate appraisal or property appraisal. It consists of a third-party report that is created by a professional home appraiser. The purpose of an appraisal is to inform the homeowner (or interested buyer) and their mortgage lender of the current monetary value of the property.
Home appraisals help to ensure that all involved parties in a real estate deal are provided with an accurate, current, and fair value of the property. Home appraisers calculate the value by checking the general condition of the property as well as comparing it against other homes in the area that have recently sold or are currently listed. A professional appraiser will also look at such things as square footage, the number of bathrooms and bedrooms, any signs of obvious damage, the quality of the views and property as well as the condition of the major systems and structures within the home.
Appraisals will often factor in elements of the neighbourhood such as nearby schools, walkability and proximity to amenities, local crime rates, future construction zones, and other things that can affect the value of the home.
What Is a Home Inspection?
A home inspection involves a thorough examination of all elements of the home and property. The home inspector will identify potential issues with the home such as foundation issues, damage or leaking of the roof, mold or water damage, building code violations, signs of pet infestations, or faulty or poorly installed electrical or plumbing systems, to name a few.
A home inspector’s job is not to report on the monetary value of the home, but on how well-maintained the home is, identify repairs that need to be made, estimate overall maintenance costs, and potential future expenses that are related to the upkeep of the home.
While an appraisal will report on the general condition of the home, an inspection looks at the home in more detail and identifies current and future issues for the buyer to be aware of. They will look at the condition of the doors and windows, drywall, flooring, woodwork, plumbing, electrical, major appliances such as furnaces and water heaters, the roof, foundation, and the property as a whole.
Do I Need Both an Appraisal and a Home Inspection?
If you are the buyer, a home appraisal is almost always required if you need to secure a mortgage from a lender in order to purchase the home. Even though a home inspection isn’t always mandatory, it is highly recommended when you are in the process of purchasing a home. While a home inspection will add a small expense to the process, it can save you thousands of dollars down the road.
Both a home inspection and an appraisal will help you establish whether the property you are considering is truly worth the amount it is being sold for. A home inspection is especially recommended in situations where the property is on the older side, is in a neighbourhood you are not familiar with, or is no longer under a builder or developer’s warranty.
The Bottom Line
A home appraisal and a home inspection will help to give you a full picture of the property you are interested in, without having to go only on the word of the seller and their agent. In almost all cases it is strongly recommended to have both services performed to ensure your peace of mind.
If you want to learn more about the home inspection process, receive a free quote, or book your home inspection, contact us at Building Insights today!