A common area where buyers and sellers may be confused is in home appraisals versus home inspections.  These two aspects in the sale of a home are both equally important – one helps the lender in determining your loan approval and the other gives you upfront knowledge and peace of mind in the purchase and sale of a home.

Home Appraisals

An appraisal provides valuable information for both the buyer and seller; however the primary objective in a home appraisal is to protect the lender.  The lender needs to be able to rely on the property being purchased is in fact true to its price.  Like you, the lender does not want to be cheated on this transaction.  The appraiser will weigh the reports based on location, proximity to schools and other public places, the size of the lot, size and condition of home, and the recent sale prices of other comparable properties.  After the analysis of the property, the appraised home will have a formulated property value and then given to lender.  A home appraisal is not a substitution for a home inspection; a home inspection is reporting the current condition of the home.

Home Inspections

A home inspection informs the buyer of the current condition of home and its major components.  The inspection point out the need for major repairs and identifies areas that may need attention in the future.  An accurate home inspection will help buyers and sellers maximize the knowledge of the property in order to make an intelligent decision before executing the purchase agreement.  Inspectors will point out the positive attributes of the home as well as the areas that need maintenance to keep the home in good shape.

The purchase agreement contract will indicate what is required – appraisal versus home inspections.  Most likely, both will be required, however if you find your contract not requiring both, take the time and seek out both services done prior to the closing.  Both services will give you an assurance that the home that is being sold is a good home and is worth the price that is being asked for.