If you are planning to buy a home, an appraisal is an important step in the process. It is a professional evaluation of the market value of the home you would like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. It is also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction. Here is the breakdown of each one and why they are both important when buying a home.

When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you are willing to pay for a house, if you will be using a mortgage to fund your purchase, the appraisal will help make sure the bank does not loan you more than what the home is worth.

This is especially critical in today’s seller's market where low market inventory is driving an increase in bidding wars , which can push home price’s upward. 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. This is what helps keep home prices in check. If there is 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.

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – 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 key expert to help you through this part of the process.

 

The appraisal and the inspection are critical steps when buying a home, and you do not need to manage them by yourself. Reach out to a local real estate professional today so you have the expert guidance you need to navigate through the entire home buying process.