Knowledge Is Power When It Comes to Appraisals and Inspections

<article class="post-67845 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-67845"><span class="entry-date">October 25, 2021</span><div class="entry-header center-block text-center"><h1 class="entry-title">Knowledge Is Power When It Comes to Appraisals and Inspections</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Knowledge+Is+Power+When+It+Comes+to+Appraisals+and+Inspections&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fknowledge-is-power-when-it-comes-to-appraisals-and-inspections%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p>Buyers in today’s market often have questions about the importance of getting a home appraisal and an inspection. That’s because high buyer demand and <a href="https://www.simplifyingthemarket.com/2021/10/06/what-do-supply-and-demand-tell-us-about-todays-housing-market/?a=712984-fa409495d5d70154d03a25e81e9540e2">low housing supply</a> are driving intense competition and leading some buyers to consider waiving those contingencies to stand out in the crowded market.<span id="more-45363"></span></p>
<p>But is that the best move? Buying a home is one of the most <a href="https://www.simplifyingthemarket.com/2021/09/30/as-home-equity-rises-so-does-your-wealth/?a=712984-fa409495d5d70154d03a25e81e9540e2">important</a> transactions in your lifetime, and <strong>it’s critical to keep your best interests in mind. </strong>Here’s a breakdown of what to expect from the appraisal and the inspection, and why each one can potentially save you a lot of time, money, and headaches down the road.</p>
<h4><strong>Home Appraisal</strong></h4>
<p>The home <a href="https://www.simplifyingthemarket.com/2021/07/23/pop-quiz-can-you-define-these-key-terms-in-todays-housing-market-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2">appraisal</a> is a critical step for securing a mortgage on your home. As <a href="https://www.homelight.com/blog/what-to-expect-from-a-home-appraisal/"><em>Home Light</em></a> explains:</p>
<blockquote>
<p><em>“. . . lenders typically require an appraisal to ensure that your loan-to-value ratio falls within their underwriting guidelines. Mortgages are secured loans where the lender uses your home as collateral in case you default on the agreed-upon payments.”</em></p>
</blockquote>
<p>Put simply: when you apply for a mortgage, an unbiased appraisal – typically required by your lender – is the best way to verify the value of the home. That appraisal ensures the lender doesn’t loan you more than what the home is worth.</p>
<p>When buyers are competing like they are today, bidding wars and market conditions can push prices up. A buyer’s contract price may end up higher than the value of the home – this is known as an <a href="https://www.simplifyingthemarket.com/2021/08/31/what-buyers-and-sellers-need-to-know-about-the-appraisal-gap?a=712984-fa409495d5d70154d03a25e81e9540e2">appraisal gap</a>. In today’s market, <strong>it’s common for the seller to ask the buyer to make up the difference when an appraisal gap occurs.</strong> That means, as a buyer, you may need to be prepared to bring extra money to the table if you really want the home.</p>
<h4><strong>Home Inspection</strong></h4>
<p>Like the appraisal, the <a href="https://www.simplifyingthemarket.com/2019/10/01/what-to-expect-from-your-home-inspection-2/?a=712984-fa409495d5d70154d03a25e81e9540e2">inspection</a> is important because it gives an impartial evaluation of the home. While the appraisal determines the current <em>value</em> of the home, the inspection determines the current <em>condition</em> of the home. As the <a href="https://www.homeinspector.org/Newsroom/Articles/Waiving-A-Home-Inspection-Good-Idea-or-Bad-Idea/15698/Article"><em>American Society of Home Inspectors</em></a> puts it:</p>
<blockquote>
<p><em>“Home inspections are the opportunity to discover major defects that were not apparent at a buyer’s showing. . . . <strong>Your home inspection is to help you make an informed decision about the house, including its condition.”</strong></em></p>
</blockquote>
<p>If there are any concerns during the inspection – an aging roof, a malfunctioning HVAC system, or any other questionable items – you have the option to discuss and negotiate any potential issues with the seller. Your real estate advisor can help you navigate this process and negotiate what, if any, repairs need to be made before the sale is finalized.</p>
<p>Keep in mind – home inspections are critical because they can shed light on challenges you may face as the new homeowner.<strong> Without an inspection, serious, sometimes costly issues could come as a surprise later on.</strong></p>
<h3><strong>Bottom Line</strong></h3>
<p>Both the appraisal and the inspection are important steps in the homebuying process. They protect your best interests as a buyer by providing unbiased information about the home’s value and condition. Let’s connect so you have an expert guiding you throughout the entire process.</p>
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