When you're buying your first home, you may encounter many unfamiliar terms and processes. You might know a bit about home inspections, but perhaps you’re not sure why they’re necessary or how they differ from appraisals. Here’s a straightforward explanation of each and their significance for you as a homebuyer.

Home Inspection

Once you're under contract on a home, getting an inspection is a crucial step. A home inspection provides a detailed look at the safety and overall condition of the property, which is vital for such a significant investment. As Realtor.com puts it:

“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.”

During the inspection, an inspector will assess various aspects of the home, such as the roof's age, the state of the HVAC system, and other critical components. If any issues are found, you can discuss and negotiate potential repairs with the seller before finalizing the transaction. Your real estate agent will assist and advocate for you during this negotiation process.

Home Appraisal

While an inspection evaluates the home's condition, an appraisal determines its value. As 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.”

No matter how much you’re willing to pay, if you’re using a mortgage, the appraisal ensures you don’t overpay and protects the bank from lending more than the property’s value.

If there's a discrepancy between the appraisal value and the contract price, your real estate professional will help you navigate further negotiations to resolve the difference.

Bottom Line

Home inspections and appraisals are both essential steps in the homebuying process, each serving a unique purpose. You don't have to manage these steps alone. Let’s connect today so you can have expert guidance from start to finish.