The Home Inspection and Appraisal | Educating Mortgage Applicants
There’s often a lot of confusion from the homeowner’s perspective about the difference between home inspections and appraisals. The responsibility falls on lenders’ shoulders to educate mortgage applicants, so homebuyers can navigate the process as smoothly as possible. Below are the most important points your homebuyers need to hear:
- A real estate appraisal is the process by which a licensed appraiser determines the market value of a home. Appraisers consider many factors when they construct their judgments, and they compare their observations of the subject home to recent sales of similar homes in the same neighborhood and surrounding area.
- Home inspections are the process by which trained and certified home inspectors examine the home for problems.
- Whereas home inspectors meticulously comb the house for flaws, appraisers document only those obvious defects that affect the home’s value.
- The lender orders the appraisal through a third-party company, such as an appraisal management company. By law the lender is not allowed to communicate directly with the appraiser.
- By law lenders must provide mortgage applicants free copies of appraisal reports.
- It is most often the homebuyer’s responsibility to arrange the home inspection and cover the inspection cost before purchasing the house. After all, home inspections benefit buyers.
The home appraisal and inspection both have important financial implications for buyers. Lenders can preempt any confusion and frustration. We encourage you to print these tips out and provide them to homebuyers as an easy reference.