APPRAISAL VS. INSPECTION
Appraisal
An appraisal is used to determine the value of a property. The valuation of the property is an estimate determined by an authorized appraiser that must have a designation from a regulatory body governing the jurisdiction of the appraiser. Appraisals are typically used for taxation purposes or to determine a possible selling price for an item or property.
Appraisals are MANDATORY when using funds borrowed from a lender to purchase a property. The property must appraise for the agreed-upon sales price. In the event that it does not, both buyer and seller must re-negotiate or the agreement between the buyer and seller must terminate.
In some properties such as new constructions, you may have to get an appraisal re-inspection. Good news, this fee is less than the appraisal amount. This is necessary when the home is not completely constructed and elements were missing during the initial appraisal.
Inspection
Inspections are conducted to determine code defects that exist within the property. Inspections are done by licensed inspectors. This is not mandatory and is up to the discretion of the buyer. Inspections can be really great ways to save money down the line by determining defects within the property. It can also be used as a negotiation tactic to get things within the home repaired, sales price lowered, or more closing costs paid.
Inspections should be conducted during the buyer’s due diligence period. Sometimes if a buyer is purchasing a newly constructed home from a builder, they may not have a due diligence period. If this is the case, the inspection should be conducted once construction is complete. Even though the home is new its still very important to inspect the property. Humans build homes and mistakes are often made. Protect yourself with an inspection. It may be worth it to spend the couple hundred dollars to avoid the pain of thousands later.