An appraisal seeks to determine the market value of the home, while the inspection is designed to assess the condition of the property. The appraisal inspection should not be used as a substitute for a home inspection. Home appraisals and inspections have different customers and intended uses. In a mortgage loan situation, a home inspection is usually done for the borrower (that is, buyers may be confused about the difference between an appraisal and a home inspection).
While they may seem the same, appraisals and inspections serve two completely different purposes. A home inspection is optional, while the mortgage lender requires an appraisal. An appraiser is more concerned with the value of the property and a home inspector is more concerned with the condition of the property. Here's a closer look at the differences between an appraisal and a home inspection.
The VA-approved appraiser will look to see if the home has adequate living, sleeping and cooking space, as well as sanitary facilities. Admittedly, as part of the appraisal process, the appraiser may conduct some type of on-site survey of the quality, condition and functional utility of the property to determine its relevant characteristics and whether it meets certain standards. An appraisal is an assessment of the value of a property based on its condition, characteristics, and sales of similar homes in the area. If you think the value of your home has been reduced by the sale price of nearby foreclosures and short sales, you may be able to convince the appraiser that your home is worth more if it is in significantly better condition than those properties.
Ultimately, what the appraiser finds during your home visit will help you determine if the property meets the HUD minimum ownership requirements. When you buy a home and it's under contract, the appraisal will be one of the first steps in the closing process. The evaluation process includes touring the house, researching comparable data, and creating a final evaluation report. The inspection carried out during the appraisal process will not be as thorough as a separate home inspection.
Homes that need major improvements will be priced at a lower value than those in better condition. Licensing laws and regulations for home inspectors don't allow them to develop opinions about the value of property like appraisers do. Appraisals are performed by trained, certified professionals who are licensed to determine the value of a home. It is important to educate consumers about the difference between appraisers and home inspectors whenever the opportunity to do so arises.
While appraisals help buyers avoid overpaying for homes, a seller may think that a low appraisal is inaccurate and reluctant to lower the price. If the appraiser expects a percentage of the home's value to be paid, it may be a sign of an unethical practice, which should be avoided. When all goes well, the home appraisal is just another box to check on a closing checklist. The amount of time the entire process takes depends on the complexity of the assessment and the evaluator's workload or schedule.