First-Time Home Buyer's Guide
Chapter 5
The Home Inspection and Appraisal Process

Home Inspections and Appraisal

Once your offer is accepted on a home, you’ll have a few weeks to conduct a full home inspection and appraisal before closing on the house. Inspections are vital since they’ll determine any major damage to the home that needs repairs, while appraisals are important for mortgage approvals to confirm the house is worth the price.

Take a look at how home inspections and appraisals are key pieces in your home buying journey.

So What Exactly Is a Home Appraisal?

A home appraisal is an estimate of your property’s value, based on factors like age, condition, building materials, neighborhood and sales of comparable nearby homes. Using these and other factors, the appraiser provides an analysis and conclusions about your property's value.

The home appraisal report usually includes:

  • A street map showing the appraised property and comparable sales
  • An exterior building sketch
  • An explanation of how the square footage was calculated
  • Photographs of the home's front, back and street scene
  • Photographs of each property used as a comparison
  • Other information that the appraiser uses to determine fair market value, such as market sales data, public land records and public tax records

Who Performs Home Appraisals?

Appraisers are third-party certified or licensed contractors hired by the lender. While they should be knowledgeable about real estate values, federal regulations also require them to be impartial and have no direct or indirect interest in the transaction. Don’t be shy — it’s always OK to ask the appraiser if they’re certified and if they work with more than one lender. If the appraiser only works with one other lender, they may have outside interests — which could lead to an incorrect assessment.

What Does an Appraiser Do?

A visit from the appraiser usually looks like this:

  • They’ll walk through the property and run through a checklist identifying the value of the home and items that alter that value — which can either shift it up or down. You’re encouraged to walk with them — you’ll learn a lot!
  • They’ll review recent sales of similar properties and current market trends.
  • They’ll assess the home's amenities, number of bedrooms and bathrooms, floor plan functionality and square footage.
  • They’ll take note of conditions that adversely affect the property's value, such as needed repairs.
  • They’ll take photos of your home and property’s layout.

    Who Pays for Home Appraisals?

    The buyer usually pays the fee at closing, although the seller can opt to pay it up-front. Typically, appraisals cost a few hundred dollars, although the property value, location and size can impact that cost.

    How Long Do Home Appraisals Take?

    A typical property assessment takes a few hours — and if you’re a buyer, you’re encouraged to stick around since it’s a great opportunity to learn more about the house! The reports can be expected within seven business days, though a busy market can slow turnaround times. The appraiser provides the final report to the lender, who will share it with the buyer.

    What Is a Home Inspection?

    A home inspection is an examination of the condition of a home that helps identify any damage or repairs needed before the sale of a home. While it’s important for you to pay attention to potential damage in each home you visit, a home inspection is conducted by a certified home inspector.

    What to Expect From a Home Inspection

    A home inspector does a thorough examination of your home that includes looking at its exterior and interior. They’ll take a close look at the home’s structural integrity, the roof, plumbing and electricity, and many other features of the home. Here’s a detailed home inspection checklist that highlights the types of things your home inspector will look for.

    How Long Does a Home Inspection Take?

    Home inspections usually take two to three hours, but the time to complete the inspection depends on a number of things, like how large the property is, the condition of the house and inspection requirements by state.

    How Much Does a Home Inspection Cost?

    According to HomeAdvisor, the national average cost of a home inspection is around $325. The cost will differ depending on things like the size of the home, age of the home and any required testing for mold, asbestos or radon. Ask your inspector upfront how much they’ll be charging you.

    Who Pays for a Home Inspection?

    Typically, the person planning on buying the home pays for the inspection, however, the cost of a home inspection may be included in the negotiation phase or closing phase of the process. In this case, the seller would be covering the cost. Whatever the case, make sure you and the seller communicate who is paying for the home inspector and who is conducting the inspection.

    Keep in mind that the appraisal and home inspection are important to ensure you’re not paying more than the home is worth. You can choose to be involved in the appraisal or inspection and ask as many questions as you’d like.



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