Buyers in a challenging seller's market often have questions about the importance of getting a home appraisal and an inspection. That's because high buyer demand and low housing supply are driving intense competition. Buyers have had to consider waiving these contingencies to stand out in the crowded market.
But is that the best move? Buying a home is one of the most important transactions in your lifetime, and it's critical to keep your best interests in mind. Here's a breakdown of what to expect from the appraisal and the inspection, and why each one can potentially save you a lot of time, money, and headaches down the road.
The home appraisal is a critical step for securing a mortgage on your home. A home appraisal is a process through which a real estate appraiser determines the fair market value of a home. It can assure you and your lender that the price you’ve agreed to pay for a home is fair. That appraisal ensures the lender doesn't loan you more than what the home is worth.
When buyers are competing like they are today in the Washington DC area, bidding wars and market conditions have pushed prices up. A buyer's contract price may end up higher than the value of the home – this is known as an appraisal gap. In today's market, it's common for the seller to ask the buyer to make up the difference when an appraisal gap occurs. That means, as a buyer, you may need to be prepared to bring extra money to the table if you really want the home.
Like the appraisal, the inspection is important because it gives an impartial evaluation of the home. While the appraisal determines the current value of the home, the home inspections provide an opportunity for a buyer to identify any major issues with a home.
Home inspections are the opportunity to discover major defects that were not apparent at the initial viewing of the property. . . . Your home inspection is to help you make an informed decision about the house regarding its condition.
I can help you navigate this process and negotiate what, if any, repairs need to be made before the sale is finalized. If there are any concerns during the inspection – an aging roof, a malfunctioning HVAC system, or any other issues – we discuss and negotiate any potential issues with the seller.
Another option to stay competitive is to do a pre-offer inspection. This allows you to conduct a home inspection prior to writing the offer to purchase. This allows you to be informed about the property condition. If you are comfortable with the condition you can submit a contract without the home inspection contingency. This has been a successful strategy for many of my clients.
Both the appraisal and the inspection are important steps in the homebuying process. They protect your best interests as a buyer by providing unbiased information about the home's value and condition. Let's connect so you have an expert guiding you throughout the entire process.