Categoriesinspection June 27, 2024 By

The Difference Between an Inspection and an Appraisal

When you decide to buy your first home, you may come across several terms and conditions you’re not familiar with. While you may have a general idea of an inspection, maybe you’re not sure why you need one or how it differs from an appraisal. To keep it simple, here’s an explainer of each one and what they mean for you as a homebuyer.

Home Inspection

Once you’re under contract on a home you’d like to buy, getting an inspection is a key part of the process. An inspection gives you a clear idea of the safety and overall condition of the home – which is important for such a big transaction. As a recent Realtor.com article explains:

“A home inspection is something that protects your financial interest in what will likely be the largest purchase you make in your life—one in which you need as much information as possible.”

If anything is questionable in the inspection process – like the roof’s age, the HVAC system’s state, or just about anything else – you can discuss and negotiate any potential issues or repairs with the seller before the transaction is final. And don’t worry – you don’t have to go through that process alone. Your real estate agent will advocate and negotiate with the seller for you.

Home Appraisal

While the inspection tells you about the current state of the house, an appraisal gives you its value. Bankrate explains:

“When buying or selling a home, an appraisal verifies that the sale price of the home is in line with fair market value. This ensures the homebuyer doesn’t pay more than the home is worth, and the mortgage lender doesn’t lend more than it is worth.”

Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal protects you from overpaying and the bank from lending you more than the home is worth.

Suppose there’s any confusion or discrepancy between the appraisal and the agreed-upon price in your contract. In that case, your trusted real estate professional will help you navigate any additional negotiations to close the gap.

Bottom Line

The inspection and the appraisal are different but equally important steps when buying a home in Chicago, Illinois, or any state in the US—and you don’t need to manage them yourself. Let’s connect with real estate agents today so you have expert guidance from start to finish.

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