Buying a home is scary, especially if you don’t know what to expect. For most, the scariest events are the home inspection and appraisal. Inspections and appraisal evoke feelings of doubt, anxiety, and uncertainty in both home buyers and sellers. Fear of the unknown is a fairly common human condition, especially when it involves large amounts of money, arcane processes and undetermined outcomes.
Two Scariest Words in Home Buying: Inspection and Appraisal
Inspector and Appraiser Play an Integral Role in the Home Buying Process
Nonetheless, the inspector and appraiser play an integral role in the home buying process. Their roles, however, serve two fundamentally different masters. Here are several things you should know about each.
Appraisal – (noun) A defensible opinion of value for a given purpose as of specific date in time.
Who Does the Appraiser Work For?
While the buyer pays for the appraisal, the appraiser works de facto for the buyer’s lender. The appraiser’s sole function is to protect the lender’s risk when making a home loan. The principal question the appraiser is attempting to answer is: “Is the property worth the agreed upon purchase price?” The lender simply wants to be as certain as possible that its making a prudent investment. Clearly, the valuation can have a huge impact on how the transaction proceeds.
Appraisals Confirm Value for Buyers, but Mostly for Lenders
Home buyers may benefit tangentially with the knowledge of the property’s real value – at least in the opinion of the appraiser. An appraisal gives buyers confidence they aren’t paying more than the property is worth. When you get a copy of the appraisal (you might have to ask for it), read the body of the document and verify the factual data points. If you find errors, bring them to attention of the lender and seek answers.
Appraisers See Property Differently than Buyers
An appraiser will not look at the property exactly the same way as buyer does. For example, the spacious below grade recreation room or the extra large lot or the property’s proximity to the buyer’s place of employment – all “must have” features on the buyer’s bucket list – will have little bearing on the appraiser’s evaluation. The buyer perspective is very subjective and personal, while the appraiser’s perspective is far more objective and standardized.
Appraisals – like it or not – play a vital role in the home buying process. We must learn to work with appraisers effectively or we can expect our transactions to fall through.
Home inspection – (noun) A visual inspection of the accessible areas of a house.
Home Inspections Tell Buyers What they Don’t Know About a House
The home inspection is paid by the buyer as it is for the buyer’s benefit. Although smart home sellers are using pre-market home inspections as part of their disclosure process, it is always prudent to get your own inspection. The fundamental purpose of the home inspection is to tell buyers about things they should know about the house, but probably don’t.
What a Home Inspector Does and Does Not Inspect
Home inspectors check most – but not all – the systems, components and appliances in the house. Specialized systems like septic systems, water pumps, elevators, pools, spas, electric gates, alarm and security systems should be evaluated by a specialized trade person. It’s important to note that home inspections are visual only. Inspectors do not do destructive testing. They don’t move furniture, open walls or tear up carpet.
Inspections Give Fuel for Buyers to Renegotiate Price & Terms
Home inspections offer buyers the opportunity to learn about the house before they own it. A home inspection could be used as basis for re-negotiation when discovered conditions are unacceptable. Some also use an inspection as the basis for considering future renovations or improvements.
Attend the Home Inspection
To get the most for your money, plan on attending the home inspection personally and asking questions. Inspectors are a wealth of knowledge and are very patient. The rule is that there is no stupid question, so ask away. Remember, the home inspector is there for the buyer’s benefit. Take advantage of their expertise and experience.
Buying a Home in Austin?
Make sure you work with a Realtor who has experience working with buyers, so they can help you navigate the process and advocate on your behalf. Just as a great inspector is worth their weight in gold, a great buyer’s agent can save you a lot of unnecessary stress, frustration and most importantly, money. Our team of buyer’s agents have the experience and tools to make your next purchase seem easy. Check out our Austin Home Buyers section to learn more about our team. Then, call us at (512) 827-8323, email us at info@11OaksRealty.com or fill out our Buyer Survey to get started.