During a standard real estate transaction, the buyer typically schedules both an inspection and an appraisal. Sometimes these terms get used interchangeably. However, they refer to separate proceedings that serve two unique purposes. If you plan on purchasing property soon, here’s what you should know about their differences. 

What Happens During a Home Inspection?

The home inspection should yield a detailed—though not necessarily exhaustive—list of existing and potential issues with the property. A reputable inspector will evaluate the foundation and the roof, as well as the home’s plumbing, electrical system, appliances, and HVAC system.

The buyer can then use their findings to renegotiate for a lower price or request repairs before closing. Home inspections typically cost a few hundred dollars. While they’re not mandatory, they can be a sound investment for buyers who want to avoid ending up with properties that need a considerable amount of work. 

What Happens During a Home Appraisal?

During an appraisal, a professional evaluates the property in person, taking note of the room sizes and sellable features. While they will also look at its overall condition, similar to inspectors, their primary purpose is not to identify problems, but to determine the total value of the real estate. External factors also play into this. For example, they will look at similar properties in the area that were sold in the last 90 days. This ensures the appraised value accounts for local market conditions.

Lenders generally require appraisals before extending funds. This allows them to confirm the mortgage will be less than the property’s current value so that the buyer will have at least some equity from the start. 

For help navigating your next real estate transaction, turn to Gilbert Realty in Mountain Home, AR. Comprised of 35 licensed agents and brokers, this firm is proud to serve both buyers and sellers across south-central Missouri and north-central Arkansas. To browse their current real estate listings, visit their website. To talk to a member of their team about your needs, call (870) 425-6282.