Home Inspections and Appraisals
There are two pivotal times in every clients loan that always cause tension: the home inspection and the appraisal. Likely because these two reports will decipher the value and quality of the home buyers purchase, it’s no wonder they are biting their fingernails waiting for the results. I see quite a few real estate agents and clients getting their terminology confused when it comes to the appraisal and home inspection, (it doesn’t help that appraisers call their appointment “inspections” either) So this is written to help you identify the differences when your lender notifies you of each.
What comes first?
In most cases you will see the home inspection come first. If you do not know a home inspector your realtor or lender will be happy to provide a recommendation. (If you want a recommendation now you can click here) You will make an appointment for the home inspector to review the property and determine any defects or flaws that could be a problem down the road.
Clients can get freaked out at this point because they feel anything the inspector says is a critical flaw in their home, remember that it’s an inspectors job to identify defects / flaws, and not all flaws are critical. A home comes with maintenance requirements and an inspector could be providing you with those requirements.
The appraisal
The appraisal is an inspection report ordered by the lender that hires a 3rd party professional to visit the house an determine it’s value. Unlike the buyers home inspection, this is for the lender, they want to know the home is worth what they are loaning on it and this is the report they use. To make it more confusing the appraiser often calls his visit an “inspection”, which can confuse realtors and buyers.
The take away
Home inspection is the buyers personal inspection of the home to determine quality and craftsmanship. The appraisal is the lenders report that determines value. If you can remember these two separations you will be fine when you proceed into your first, second or third home.
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Justin Scott
Loan Officer
NMLS 878581
- C) 920-530-4484
- O) 920-490-8823
- F) 920-490-8967
Executive Mortgage
NMLS 271650
909 . E Walnut Street
Green Bay WI 54301
