When buying a new home, all kinds of new words and phrases are thrown your way. It can get very overwhelming, during an already stressful process. A commonly asked question we get is, what is the difference between appraisers and inspectors? Allow us to clear this one up for you!
Appraisers are the ones who determine the value of the home. Using recently sold properties, known in the business as “comps,” and by looking at the property itself, they arrive at the magic number. This number is what determines how much the bank will lend to you to buy the home.
The appraisal can sometimes make or break a contract. If the appraisal comes in lower than what the buyer is offering, then either the buyer will need to bring cash to cover the difference, or the seller will need to lower the purchase price. Sometimes, buyer and seller agree to meet in the middle. However, if they can’t come to an agreement in either direction, the contract may be cancelled.
Inspectors are the ones who look at every single detail of the home, and let you know everything about it that might be a concern. It’s like CarFax for your house. The inspection report will include pictures of anything the inspector sees that the new homeowner should know about.
Inspections don’t usually make or break a contract, unless there is something significantly wrong with the home that wasn’t previously disclosed. However, issues that arise in the inspection might be a catalyst for renegotiation of the contract.
Prior to the recession in 2008, realtors and loan officers would interact with appraisers. However, that has all changed, and now they are not allowed to have any contact whatsoever. This helps ensure that prices are not artificially driven up by these parties collaborating on what they value needs to come in at in order to close the deal. On the other hand, inspectors do still work with realtors, and they are allowed to freely discuss the issues related to the property.
Do you have any questions about how this whole process works? Are you thinking about entering the market? Give us a call!
Teryn Williams: 574-250-3054
Katie Mecham: 801-857-8654
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