Home appraisals and home inspections are sometimes confused. While they are both an important part of the home buying process, they ultimately serve two different purposes.
• Appraisals estimate the value of the home, taking into consideration factors like comparable sales of homes in the area
• A home inspection looks at the condition of the home in detail, including major mechanicals and the overall structure
• Lenders use the appraised value of the home to help determine what loan amount to offer
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Pat: The appraisal is probably the most important part of the whole transaction. An Appraisal is, an opinion of value, um, with comparable sales from the surrounding area.
Duane: Uh, a lot of folks confuse the difference between a home inspection and a home appraisal. A home inspection is concerned with the condition of the house. We’re looking for, how is this house operating, how old are the components, what kind of shape are they in. An appraiser, is concerned about the value of the home. So it’s condition versus value.
Pat: The appraised value is the value of the property in whole. The pa- value of the property with the land that it sits on, the location that it is, the condition that it is, that’s the appraised value.
Duane: Appraisers look a-at some at some of the condition of the house, because they want to be able to value the house appropriately for its condition. But they don’t go as, into detail about the uh, condition of the home, as a home inspector will.
Pat: And that in turn is given to the lender, and the lender gets a good grip on what they should be lending. Not in relationship to what the buyer qualifies for, because just cause a buyer qualifies for more, or less, doesn’t make the value. The value comes from the appraisal, and that is what the lender should be working off of.
Duane: So appraisal is value. Inspection is condition.