Before we dive into today’s topic, we wanted to mention how excited we are that hockey season is right around the corner. As the official real estate team of the Tampa Bay Lightning, we’ll be giving out some great prizes during the season such as hats, sticks, and signed merchandise. Keep an eye on our various social media pages for your chance to win. Now, onto today’s question.
Recently, I got a question about the difference between an inspection and an appraisal. They are similar in a lot of ways, but they are two different processes for two different purposes.
A home inspection is where all major mechanical systems in a home are checked by a licensed inspector. This includes the roof, foundation, electrical system, plumbing, appliances, and other major components. The inspector wants to determine if they are working correctly or not.
They have similarities, but are two completely different processes.
The appraisal, however, is the lender’s ability to determine the market value of the home. This is one person’s opinion, but that opinion matters. The lender needs to know that the home they are helping finance is in proper working order. They will check many of the same mechanical systems as the inspector, but for different reasons. They are checking for health and safety issues more than anything else, and they are making sure everything is in working order. The lender wants to know they are loaning money on a good home.
While there is some crossover between inspections and appraisals, they are two drastically different things. The appraisal process is managed by the lender and mostly done for their sake. The appraisal is there to ensure that the buyer doesn’t overpay for the home and the lender doesn’t over-lend.
We have a lot of sellers that want to see the appraisals, but it’s up to the buyer’s lender. Typically, it is a buyer-protecting process. I hope this helps you understand the difference between the inspection and appraisal processes a little more.
If you have any questions, give us a call or send us an email. We would love to hear from you.