What Is the Difference Between an Appraisal and an Inspection?
The inspection and appraisal are key points during the home buying process, but many people fail to fully understand their unique purposes. Let’s take a look at how the two differ, why they are important, and what they could mean for the homes for sale in Birmingham, AL.
(If you are looking for homes for sale in Birmingham, don’t make these common mistakes!)
What Is an Appraisal?
Appraisals are required by banks and are done to protect a lender from paying more for a house than what it is actually worth. Appraisers will inspect the visual aspects of a home, from the square footage to any observable defects. They will also compare the home’s price point to other surrounding houses in the neighborhood.
The appraisal helps determine how much a lender will loan, at what interest rate, and how much the down payment should be. Most lenders will only loan about 80% of the market value of a home. This is important because it means that even if a buyer and seller agree upon a price, if the appraisal comes in at a lower number, the buyer has to be able to make up the difference or the seller can lower the price in an effort to save the sale.
What Is a Home Inspection?
Home inspections are done to protect the buyer. They are not required, but highly recommended. The appraisal is great for checking very basic problems, like the condition of walls and carpeting, but they fail to go much deeper. Home inspections will check for safety issues such as water damage, electrical problems, or leaky plumbing.
Buyers must hire a home inspector to examine a home, and the price is usually a few hundred dollars. If a home inspector discovers problems, buyers have the option to back out of the deal (which is why inspections are so popular). If the problem isn’t a deal-breaker for the buyer, they can always try to negotiate for a price reduction or ask the seller to address the repairs before the closing date.
Homes for Sale in Birmingham, AL
Are you looking for homes for sale in Birmingham, AL? Don’t go at it alone! Real estate agents are professional negotiators, and you will want one on your side if and when something pops up during the home inspection. Contact ARC Realty today!
