From time to time, we talk with home buyers who believe (or have been told) that they do not need a home inspection if they have their home appraised. Let’s take a closer look at the differences between a home appraisal and a home inspection.
A home appraisal is required by a lending institution to protect it from lending more for a home than it is worth. This would put the bank at risk of taking a loss if the buyer defaults on the loan. (Yes, an appraisal can also protect a buyer from paying too much for a home. An appraisal can even identify major, easily-seen issues with a home, but the key reason for the appraisal is to protect the lending institution.)
Think of an appraisal as kind of an onsite “Kelly Blue Book” (common resource used to determine a vehicle’s value) for the bank. An appraiser examines the overall condition of the home and compares it to houses sold in the same area, of similar square footage, age and condition. (Kelly Blue Book provides an estimate of a car’s value, based on the selling price of vehicles of the same age, make and model in similar condition and location.)
The appraisal is typically ordered by the lending institution, not the home buyer. As the home buyer, you are usually not even invited to be present for the home’s appraisal, even though you are paying for this service.
Conversely, a home inspection is much like having your trusted mechanic take a car for a test drive — before you buy it. Your mechanic will take off the wheels, check the brakes, all the fluids and ensure the vehicle is operating as it should. A trusted mechanic will look under the hood and crawl under the car, checking for leaks, rust and signs of neglect. A trusted mechanic will also often tell you what types of repairs you might expect on this particular car in the future. He or she will share a lot of expertise based on experience working on vehicles.
A quality, thorough home inspector will take the same care while inspecting a home you’re buying. A home inspector will check all of the systems in the home thoroughly. Most quality, experienced inspectors will actually invite you to attend the home inspection so you can ask any questions. A quality, caring home inspector will explain nearly everything you will need to know as a homeowner, including how and when to perform routine maintenance, what future repairs might cost and even where utility cut-offs are located and how to use them. If issues are found, a quality home inspector with extensive experience will explain these issues and often explain how to make these repairs most cost-effectively, based on decades of experience.
While the bank typically chooses the appraiser, the home buyer usually selects and schedules the home inspection.
Your home inspector is working for you, the home buyer.
If you’re buying a home and securing a loan, you will likely be required to pay for a home appraisal in order to protect the lending institution.
You will want to pay for a home inspection — to protect you and your family from unexpected repairs and potentially even a bad buying a decision.
Feel free to call Housebusters if you have any questions about our qualifications and experience — or to schedule a home inspection or any other inspection service. You can also book inspection services with us online!