Purchasing a home is a big decision that comes with a myriad of factors and processes that need to be kept in mind. Two of these crucial processes are home inspections and home appraisals. Potential homeowners need to attain a complete understanding of these concepts before making any commitments. At first glance, both concepts appear to involve property evaluation. However, a closer look reveals that while both services comprise property evaluation, they provide distinct benefits and yield separate results for future homebuyers.

The first step should be to understand each concept individually and then delve into the benefits and advantages each service has to offer.

What is a Home Appraisal, and How Does It Work?

It is a process conducted by a real estate appraiser that establishes the fair market value before the interested party purchases the property. The appraiser ensures that the price agreed upon is fair when it comes to the financing aspect of the property. It is the lender or the bank that proposes an appraisal if the buyer lacks the finances required to make the purchase and is in need of a loan. In addition to this, appraisals are used as a means to calculate property taxes.

There is a broad range of factors that the appraiser needs to take into consideration before providing his final verdict. The appraiser examines the property’s current condition, size, and location, the price range of similar properties in the area sold in the recent past, and more. Using this information, the appraiser determines the fair market value of the property. Based upon this estimation and other financial considerations, the lender then makes a decision on whether there is a need to provide a loan to the buyer and narrows down the maximum amount that they can lend. 

The Benefits Extended Through an Appraisal

A buyer can leverage the process of an appraisal to ensure that an accurate price is determined for the property and that they do not end up overpaying for it. In the event that the appraisal value is lower than the purchase price that both parties, seller and buyer, agreed upon, then it opens up the opportunity for renegotiation. Alternatively, if the appraisal value turns out to be higher, it could potentially lead to favourable loan terms. The buyer can negotiate the specifics of the previously finalised financial arrangements, like lesser payment requirements or reduced interest rates.

What is a Home Inspection, and How Does It Work?

A home inspection is a process that involves a home inspector carrying out a home visit to evaluate the overall condition of the property. As opposed to a home appraisal that entails determining the value of the property, a home inspection involves a professional examining and evaluating the overall physical structure and condition of the property.

The inspector examines the structural integrity and safety of the home. The expert will inspect the condition of the foundation, electrical system, roof, plumbing, and HVAC (heating, ventilation, and air conditioning). They will also check for any insect or rodent infestations. All the findings are noted down and documented. A report amalgamating all the information is generated, thereby allowing the buyer to pinpoint any issues with the property that require immediate attention or may prove to be problematic in the distant future.

It is important to note that this process of appraisal is done sans the presence of the seller or buyer. Once the report has been generated, the findings and any relevant information are revealed to both parties as well as the lender.

Not a Mandate, but an Advantageous Service

All in all, home inspections help identify any shortcomings the house may have. It also indicates what the necessary repairs are to rectify the situation and put the mind at ease. Any concerns related to comfort and safety are put to rest with the inspection. Although not necessary, buyers can join the inspector during the inspection. The buyer can put forth any queries they may have and have the professional explain any issues that need to be addressed. This inspection also helps the investor calculate the cost of the repairs. 

The information can then be utilised to negotiate the final price with the seller. The upgrades the house requires can either be fulfilled by the seller or the buyer can urge the seller to deduct the cost from the final purchase price. 

Being knowledgeable about the current market value of the property and its condition is key when making a huge investment. It also ensures the entire home-buying process is a smooth one. For more information about the real estate market in Goa, head to the Rainforest Estates blog.