Understanding the difference between a Home Inspection and a Home Appraisal is an important part of your Real Estate transaction. Both are a very important step in buying or selling a home. Knowing what factors may affect your Home Appraisal may give you the opportunity to maximize the value of your home.
What is a Home Appraisal?
A Home Appraisal is the estimated value of a home. It is a combination of an inspection of the property and a comparison of recently sold properties in the area to estimate the value. There are several factors that appraisers review in order to determine the value of your home. The appraisal of your home is a required process of the real estate transaction before you complete the home buying, selling, or even refinancing process. For the buyer, it protects them from paying more than the house is worth, however, it is a negotiable part of the process where the buyer may still want to move forward and waive the appraisal cost. A Home Inspection focuses more on the functionality of your home while a Home Appraisal focuses more on the surface level or “aesthetics” of the home along recently sold homes in the area. Also knowns as “comps”
Who conducts the Home Appraisal & How much does it cost?
Appraisals are done by a licensed third-party appraiser who shouldn't be connected to the buyer, seller, or lender. The intent is to have an unbiased party to determine the fair value of the home. However, the lender is typically the one who orders the appraisal and the borrowers pay for it. When it comes to the cost of an Appraisal, the first thing you should know is that this is a non-refundable fee and it is an out of pocket expense paid by the borrower. This is the case even if the sale does not complete. Most home appraisals can range from $300-$600, however, the cost may vary depending on:
The type of home
The area of the home
The current condition of the home
The size of the home
The time it will take to fully evaluate the home
What factors are taken into consideration during a Home Appraisal?
There are several factors that the appraiser will review upon his evaluation. The mission of the appraiser is to provide a fair market value of the property, and in order to do so, they need to be able to review these items so that they can determine how they will affect the price of the home. In some cases, an appraiser may also request additional inspections such as a roof inspection, pest inspection, structural inspection if they see any signs of potential issues. In the event that the condition of the home does not meet the criteria of the lender, they determine what items need to be correct before the buyer moves in.
Structural Integrity of the home
Health & Safety Hazards
Working HVAC System
The amount of livable space
Working Plumbing System
Working Electrical System
Condition of flooring, walls, and windows.
Signs of pests & termites.
The general condition of the home.
and much more.
Now, there are several things in your power to be able to do your best to maximize the appraisal of the home. Not only by making sure the home is aesthetically pleasing but clean and organized. Take the necessary time to add a little touch-up paint in areas where needed, clean the home really well, open the curtains or blinds to maximize sunlight, declutter the home by removing unnecessary items, remove certain pieces of furniture to maximize space. There are a couple of things you should really focus on is the upkeep maintenance of your home, an example would be putting off the necessary HVAC yearly maintenance. This affects the working condition and life expectancy of the unit. If it is determined that the Heating & Air system requires major repairs it will decrease the value of your home. This can also be comparable to putting off the necessary repairs of a roof leak that has been neglected over the years, a simple $500-$1000 repair that could have been done, may now look like a $5,000-$20,000 depending on the severity such as restoration costs other than the roof like the ceiling, drywall, mold, etc. Having a Home Inspection before you list your home can also give you the ability to plan ahead, this is a very useful tool known as a “Pre-Listing” Home Inspection.
How will they compare my home to others?
The appraiser will be looking at the recent sales of the nearby homes in the area. This is also something that your Real Estate agent should have done before listing it. This is also why it is important to hire a qualified, experienced, and tactful Real Estate agent in order to provide the best comparable homes possible to maximize your transaction.
Call Diamond Property Inspections at (951) 351-1855 to schedule your Inspection today in Riverside County or its surrounding areas. Let us know when we can help you start your listing process by scheduling a “Pre-Listing” Inspection. “We don’t cut corners, we inspect them!”