home inspections central florida

Are you looking to purchase your dream home? Navigating the real estate world can be scary if you don’t know all the terms realtors use when looking at homes. An inspection and appraisal can help maximize benefits, minimize risks, and boost your confidence while purchasing your new home. However, it is important to remember that appraisals and home inspections are not the same.

How Are Home Inspections and Appraisals Different?

While an inspection and an appraisal are services that include assessing your property, their purposes are entirely different and benefit homeowners differently. An appraisal’s primary purpose is to determine a home’s value. On the other hand, an inspection’s purpose is to help you understand precisely what condition the house, property, and outbuildings are in.

What Is an Appraisal?

An appraisal of your home is the process most mortgage lenders use to determine the market value of the home you are looking at. Appraisals are required by law to be performed by licensed third parties with zero connections to the mortgage company you are using. The appraisal determines the home’s value using several factors, including location, condition, and the value of similar homes.

The appraiser will take similar homes in the area that have recently sold and compare their prices. These homes can also be known as comps or comparables. Your appraiser will gather information online, with a walk-through or a drive-by. The appraiser collects, analyzes, and then presents the data in a final report. This report helps your mortgage lender decide whether or not they will approve your loan.

The Appraisal Process

The appraisal process involves a number of steps. The actual appraisal generally includes a walk-through of the home, researching comps, and creating the final report. The appraisal generally occurs after an offer has been accepted for the home. Mortgage lenders normally order the appraisal. However, buyers will usually have to foot the bill.

Once a lender orders an appraisal, a neutral third party will examine the home. They will look at the interior and exterior, look at comparables, and report their professional opinion on the house’s market value. The lender and borrower will both receive this report.

Appraisals Are Required

While there are rare occasions where an appraisal isn’t necessary, most mortgage lenders require appraisals before you are able to close on your loan. In October of 2019, federal regulations changed the threshold for appraisals from $250,000 to $400,000. However, that doesn’t mean homes valued under $400k are exempt. This regulation primarily affects privately held mortgages not backed by the federal government.

The regulation does not apply to homes purchased or backed through the Federal Housing Administration, Department of Veterans Affairs, Fannie Mae, Freddie Mac, or the Department of Housing and Urban Development. Most homes are financed via federally backed mortgages, and you will most likely need an appraisal.

Benefits of an Appraisal

Appraisals do have some great benefits. They help you get approved for your mortgage. They ensure that you pay the correct amount of property tax. The appraisal also ensures that you aren’t paying more than the home is worth and gives you a legitimate reason to drop the sales prices if the appraisal comes in low.

Low Appraisals

Low appraisals, while not common, are stressful for buyers and sellers. Low appraisals are most common in seller’s markets. Prices skyrocket, and some buyers may pay above an appraised price. If you are selling and the appraisal comes back low, there are things you can do to save the deal. The first is to lower your asking price. If you are unwilling to drop the price, you can dispute the appraisal or ask for a second one.

While not great for a seller, as a buyer, a low appraisal could work in your favor, with the seller dropping their asking price. However, this may not occur, and the seller will hold out in hopes of a better offer. Even if this happens, you can walk away confident that you didn’t purchase a house for more than it is worth.

What Is an Inspection?

In contrast to appraisals, home inspections thoroughly examine the house to determine its condition and locate potential problems. For example, home inspectors examine the structural integrity of the house, the roof, the attic, the electrical systems, the plumbing systems, the basement, the exterior of the home, and any other items on their checklist.

The inspector can take you through the inspection process, point to issues, reveal problems, and give advice for items they believe could become issues in the future. They will provide you with a copy of the final report with pictures, descriptions, and lists of things that may need to be repaired. Once you have the report in your hand, you can negotiate to have the seller complete or pay for repairs.

The Inspection Process

Real estate inspections usually begin at the buyer’s request as a contingency to the offer they have placed on a home. They can hire a certified home inspector to check the house if their offer is accepted. Inspectors are looking for significant safety issues and damages. This can include old or damaged roofs, uncovered or unsafe electrical wires, lousy plumbing, and much more.

Not all inspections are the same. The basic inspection will catch many potential problems. However, if you have other concerns, you should look into purchasing a more thorough inspection. Some additional inspections you may order include radon testing, chimney inspections, mold, pests, or termite inspections. After the inspection, the report is finalized and provided, the buyer and seller negotiate repairs, and after they agree, the sale proceeds.

Inspections Are Recommended, Not Required

Appraisals are typically required. However, home inspections are not. Buys can choose whether or not they wish to request an inspection of the property. Remember, inspections help protect you from risky purchases. They catch safety issues and help keep your family safe. Speak to your real estate agent if you are wondering whether or not you should have an inspection performed.

Benefits of an Inspection

Your mortgage lender requires an appraisal because it is in their best interest. Likewise, an inspection is in your best interest. The inspection will protect you from investing in a potentially risky home. It can determine if the house is a good purchase and, in turn, will boost your confidence. In addition, the inspection will provide an in-depth report of your home’s condition and the unique quirks it may have.

The home inspection can help you feel safe and comfortable with your family living in the house. If you are purchasing a recently built home or building your home, the inspection ensures that the construction was completed correctly. Additionally, an inspection gives you weight when negotiating costs or repairs with the seller. An inspection will only ever help you out as the buyer.

Get an Appraisal and an Inspection

You should never use the home appraisal as a replacement for a home inspection. Appraisers are looking for the value of the home, so the inspection that they complete is vastly different than that of a home inspector who is looking for problems. Furthermore, the inspection performed during an appraisal is nowhere near as in-depth as a thorough home inspection.

Inspection Before Appraisal

As a rule, you should have a home inspection before the appraisal. If the inspector finds extensive damage, repairs, or other issues during their inspection, you do not need the appraisal because you aren’t purchasing the home. Placing the appraisal after the inspection could save you both time and money.

Choosing an Inspector

Choosing the right inspector for the job is vital. Your home inspection won’t be very beneficial if you hire a lousy inspector. You can ask for recommendations from your real estate agent, friends, or family. Your agent should have some good contacts that you can reach out to. Don’t hire the first inspector they mention; once you have a name, do some research. Check out the inspector and the company, then ask for references and check their reviews.

Ensure that the inspector is certified in your state and is insured. It’s also essential that you know they will not be influenced by anything during the home examination. For example, don’t hire someone who does work on repairing or renovating homes. Their recommendations could be colored by the possibility of future business with you. If at all possible, be there during the inspection so that you can learn about the house and ask any questions that you have.

If you are ready to purchase your dream home, make sure that you have certified professionals in your corner who can perform appraisals and Central Florida home inspections to keep your family safe. Call Frontline Inspections and ask us about our services, including our advanced pool inspections and wind mitigations, today.