Close

To personalize your experience, enter your birth year and zip code:

Personalize your experience:

Personalize your experience:

 

 

Close

Collins Community Credit Union

What’s the Difference between an Appraisal and a Home Inspection?

If you’re planning to buy a home, an appraisal is an important step in the process. It’s a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. It’s also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction.

Published on Jan 26, 2021

Here’s the breakdown of each one and why they’re both important when buying a home.

Home Appraisal
The National Association of Realtors (NAR) explains:
“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For  the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”

When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.

This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.

However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.

Home Inspection
Here’s the key difference between an appraisal and an inspection. MSN explains:
“In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your Realtor is a key expert to help you through this part of the process. The appraisal and the inspection are critical steps when buying a home, and you don’t need to manage them by yourself.

Click here to contact a mortgage loan officer today!

 

What's New

  • Fraud Text Alerts

    Introducing Fraud Text Alerts

    07 June 2021
    At Collins Community Credit Union, your security is our priority. That’s why we’re excited to introduce fraud text alerts. These alerts will help you monitor your money and keep your accounts safe. To receive these alerts, you don’t need to take any action. You will automatically start receiving text alerts for your Collins Community Credit Union debit card and credit card. Learn More
  • How To Increase The Value Of Your Home With Curb Appeal Updates

    11 May 2021
    The United States housing market is booming, and Iowa is no exception. Lack of inventory and historically low interest rates contribute to the red-hot real estate market. Still, despite the skyrocketing price of lumber and sluggish construction projects, data from one real estate listing company indicated home sales are up 20% across the board in 2021. Learn More
  • Be Your Own Fraud Fighter: Tips To Keep Your Money Safe

    26 April 2021
    In 2020, the Federal Trade Commission recorded 2.2 million reports of fraud and $3.3 billion lost by victims. As these numbers continue to grow, it's crucial to stay informed and take action to protect yourself against scams and potential fraud. Check out the tips and current trends below from Collins Community Credit Union's Fraud Officer, Tabby C., to help keep your money safe! Learn More
  • The Top 5 Home Improvement Projects For The Best ROI

    23 April 2021
    If you're thinking about moving, whether you're upgrading, downsizing, or changing locations, now is the time to sell your house. Tighter inventories and increasing demand create an ultra-competitive market, which means houses are selling faster and often for top dollar. You may know specific home improvements can help improve your home's value, but not every upgrade helps drive a higher price. Learn More
View All What's New
Video Banking