Home Inspection vs. Home Appraisal

Some future home buyers may be confused about the difference between a home inspection and a home appraisal. While they sound like they are the same thing, they are very different in reality. The two serve different purposes. A home inspection is optional; while an appraisal is required by a mortgage lender. An appraiser is more concerned with the value or a property, and a home inspector is more concerned with the condition of the property. Here is a closer look at the differences between the two.

Home Inspection

It is the inspector’s job to take a more in-depth look at the home than the appraisers do. Home inspectors are optional. Everything from the foundation to the roof will be thoroughly evaluated to make sure the buyer knows exactly what they are getting. Unlike an appraiser, home inspectors do not place a value on the home. Inspectors create a report that lets the buyer know the overall condition of the home. They inspect things that you do not necessarily see in a walk-through of the property. They will check the plumbing (pipes), radon, possible lead paint exposure, any signs of structural issues, ventilation, heating, air conditioning, electrical, drainage, etc. Inspectors will also advise you to contact a professional, such as a structural engineer, plumber or electrician if they feel there are any major issues to be addressed. The inspector will provide you with a clear understanding of what is going on with the home and if they foresee any future problems.

Home Appraisal

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 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, square footage, number of bedroom and bathrooms, lot size, location, views, etc. All these factors are taken into consideration when an appraiser is determining the value of a home. Permanent structures on the property, such as in-ground pool or sprinkler systems will impact the value. However, movable structures like sheds and above ground pools are not included in the valuation.

The Structure: Appraisers look at the overall structure and condition of the home. The quality and conditions of things like the foundation, roofing and siding, are all taken into consideration when determining the value of the property. Appraisers are looking for cracks, damages, leaks and code compliance. The quality of materials used in the structure are also looked at. The higher the quality of the materials, the greater value.

Home inspections and appraisals are just two of many important steps you’ll take when purchasing your home. If you have questions about the mortgage process, the experts at First Ohio are here to help. Contact us today to get started.