In the year 2021, Americans purchased around 6.12 million existing homes. While the market isn't quite as hot it was in 2022, anyone looking to sell their homes can probably make it happen with minimal trouble. Of course, that also means dealing with a real estate closing.
You'll need help from real estate lawyers and title services to get all the paperwork in order. Then, there are things that the buyer will want to be done.
The buyer's mortgage provider will insist on an appraisal. Plus, nearly all buyers will also need a home inspection. While there is some overlap between appraisals and inspections, they serve different ends.
Allow us to give you a quick overview of the two processes and their key differences.
What is a Home Inspection?
Before someone buys a house, they want a clear sense of what they're looking at in terms of potential repairs or problems. A home inspection helps clarify that issue for them. An experienced home inspector looks at:
- Electrical system
- Plumbing system
- Attic and basement
The inspection identifies potential problems, such as out-of-date wiring, old pipes, or mold. It also identifies potential future problems, such as an aging roof or moisture in the basement.
What is an Appraisal?
Interestingly, an appraisal covers much of the same ground as an inspection. The appraiser will look at the major systems of the home and check the condition of the interior.
Appraisals will also look at the grounds, landscaping, and general curb appeal of the property. The goal of the appraisal, however, is not to alert potential homeowners to lingering or looming problems.
An appraisal looks at the home in terms of its market value. How much is it worth, right now? While the appraiser might take problems into account, it's only in terms of how it affects the value of the property.
There are a couple of key differences between appraisals and home inspections. Right at the top of the list is who the service benefits.
Inspections happen for the benefit of the home buyer. It lets them decide if they want to deal with any problems that might come with the home.
Appraisals are strictly for the lender. The lender wants assurance that, if the buyer defaults, they can sell the home and recoup the amount of the loan.
The other key difference is the focus of each process. Inspections look for problems. Appraisals look for value.
Inspection, Appraisal, and Real Estate Closing
Before any real estate closing, you can expect a real estate attorney involved on the buyer's side to insist on an appraisal, an inspection, or both. The drive for an appraisal will come from the lender. The drive for the inspection will come from the buyer.
The lender wants an appraisal as justification for the amount they'll lend the buyer. The buyer wants the inspection so they don't take on more repair work than they can realistically afford.
Emerald Coast Title Services specializes in the closing process. For more information on our services, contact Emerald Coast Title services today.