Differences Between Inspection & Appraisal for Homes & Condos
What's the difference between a home inspection and a home appraisal? The simplest answer is that one is an analysis of the physical condition of the property while the other is an analysis of the approximate market value of the home or condo. But what should you expect with an appraisal or an inspection? Which comes first and how much will they cost? Are an inspection or appraisal necessary? Let’s take a closer look at each.
Real Estate Inspection
A home or condo inspection is done to examine the properties current condition and the overall safety of the property.
When:In most cases, a home inspection is purchased by the buyer to determine if there are any major issues with a property they are under contract to buy, but sometimes sellers preemptively hire a professional home inspector to find any issues before listing their Property. Home inspections can typically last 1 to 3+ hours.
Cost: Real Estate appraisal cost can vary greatly based on the size of the property and what is being inspected. Generally there are additional charges for inspections on wells and swimming pools, as well as, mold tests and testing for termite or wood-destroying-organisms. Inspection rates vary by company and the guarantees the inspector provides will also vary. It is always good to shop around, but it is more important to ensure you are getting an experienced inspector for your property type. Central Florida inspections currently range from $350 to $1,000+.
Necessity: 99% of the time you should inspect, and even that other 1% we would still recommend an inspection. Even if you as a buyer intend to purchase a property regardless of condition, an inspection is a useful tool to start your checklist of fixes and will help prioritize your first steps after purchase.
Real Estate Appraisal
An appraisal is done by a certified professional who provides a fair market value of a home or condo based on comparable sales and the features of the property.
When: An appraisal is most often ordered by a lender when completing a loan on a home or condo. The lender or bank may require an appraisal to determine if the amount being borrowed for the loan is in line with the actual value of the property. But like with inspections, sometimes sellers will hire an appraiser prior to listing their home or condo in order to formulate a listing or asking price. Appraisals do not generally take a great deal of time to perfrorm at the property, with appreaisers only on site for less than an hour in most cases.
Cost: Appraisal costs will also vary, but most recently we have seen appraisals cost around $500. When an appraisal is ordered for the loan, the buyer pays for it in most cases. If a seller opts for an appraisal simply for gauging market value, it may be wasted money as most Realtors® can provide a Comparative Market Value free of charge.
Necessity: An appraisal will be required for most loans that do not have a substantial down payment, typically 30% or more.
Now that you have a better understanding of the difference between inspections and appraisals, what further questions do you have? Please feel free to contact us and we will get you an answer.