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Building Code, Quality of Construction, and the Home Inspection - Part 4

This 4-partseries will help buyers set and maintain realistic expectations aboutthe homethey are purchasing. Part 4 will cover the difference between an appraisal and a home inspection.

Part 4. What's the Difference Between an Appraisal and a Home Inspection?

Anappraisalis a professional evaluation of the market value of the home youd like to buy. In most cases, the lender orders an appraisal to confirm or verify the homes value before lending a buyer money for the purchase. Its different from ahome inspection, which assesses the homes condition before you finalize the transaction. Heres the breakdown of each one and why theyre both important when buying a home. 

Home Appraisal 

TheNational Association of Realtors(NAR)explains: 

An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lenders decision to provide funds for a mortgage. 

When you apply for a mortgage, an unbiased appraisal (required by the lender) is the best way to confirm the homes value based on the sale price. Regardless of what youre willing to pay for a house, if youll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesnt loan you more than what the home is worth. 

This is especially critical in todayssellers market,where lowinventoryis driving an increase inbidding wars, which can push homepricesupward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more. 

However, the lender will only allow the buyer to borrow based on the value of the home. If theres ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process. 

Home Inspection 

Heres the difference between an appraisal and an inspection. MSNexplains: 

In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home. 

As we discussed in Part 1 of this series, the home inspection is a way to determine the homes current state, safety, and condition before you finalize the sale. In Delaware, you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a crucial expert to help you through this part of the process. 

Bottom Line

I hope you found this four-part series helpful. Buying a home is exciting, but its also a big deal. My best friend is in the middle of selling her home in Pennsylvania. She lost her husband last year and dealt with many of the issues I talked about in this series. She told me how grateful she is that she has a terrific REALTOR that helped her with every problem that came up. So am I! 

Lets connect today and begin the search for your next home in Delaware. All of the agents at Active Adults Realty have the experience to help you navigate the entire home buying process.  

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