May home buyers get confused about the difference between an appraisal and a home inspection. While they may seem like the same thing, appraisals and inspections serve two completely different purposes. A home inspection is optional, while an appraisal is required by the mortgage lender. An appraiser is more concerned with the value of the property, and a home inspector is more concerned with the condition of the property. Here is a closer look at the differences between an appraisal and a home inspection.
An appraisal is an evaluation of a property’s value based on its condition, features, and similar home sales in the area. Appraisals are conducted by trained, certified professionals who are licensed to determine the value of a home. Getting an appraisal is a standard part of the mortgage process. Before a mortgage lender will loan you money to buy a home, they want to get an idea of how much the property is worth. The following factors are typically considered during an appraisal:
Comparable Properties: Appraisers look at recent sales of similar homes in the area to help determine the market value of a home. If homes with similar features in the same neighborhood are selling at a particular price, this will influence the assessed value of the home in question.
The Property: A home’s physical features such as the age of the home, its square footage, the number of bedroom and bathrooms, lot size, location, view etc., are all taken into consideration when an appraiser is determining the value of a home. Permanent structures on the property, such as an in-ground pool or sprinkler system also impact the value. However, movable structures like sheds and above ground pools are not included in the valuation.
The Structure: Appraisers […]