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While under contract for your new home, but before it’s time to close, there are a few tasks that need to be completed. These include a home inspection and an appraisal.
Both reports are particularly beneficial for the buyer and should be a standard part of any home purchase. Here’s a rundown of what each entails and what to expect throughout the process.
What’s a home inspection?
As the name suggests, a home inspection is a report on the condition of the home, as written by a qualified inspector. This report, which usually takes a few hours to complete, will not only cover the structure itself but also each system within the home.
Without a certified inspection, you might wind up buying a glorified lemon. No matter how beautiful (or expensive) a house may be, huge issues could be lurking.
Once you close on your home, any existing problems—such as water damage, mold, or a roof that is in need of serious repair—become your problem. It’s best to be made aware of them before finalizing the sale, so you can make an informed decision.
Your home inspector will thoroughly examine and test the following, though there may be other features of your home that should be checked.
● Heating and cooling systems, including thermostats
● Plumbing, including toilets, tubs, showers, sinks, septic systems, and water lines
● Exterior features, including foundation, driveway, roof, and chimney
● Electrical systems, including light fixtures, ceiling fans, outlets, and fuse box
● Visually check for signs of mold, mildew, or water damage
● Test existing appliances, including smoke and carbon monoxide detectors
If they see any red flags or areas that could cause potential problems in the future, it will be notated in the report. As a buyer, you can then request that the seller either make repairs or lower the cost of the home to account for the problems. Also note that if repairs are needed, this can impact the closing timeline for the sale.
If a seller refuses to make repairs, or won’t drop the sales price enough to account for any issues found, you have the option to withdraw your offer altogether.
The cost and who pays
The average home inspection cost is $327, though this number varies by area as well as the size of the home. Typically, though, you can expect to pay less than $500 for this report.
Buyers are usually expected to pay for the home inspection out of their own pockets. After all, this report is almost entirely for their benefit (home inspections are rarely required by mortgage lenders). However, buyers can sometimes negotiate to have sellers cover the cost of the inspection.
What’s a home appraisal?
The second report you’ll want to have done is the home appraisal. For this report, an unbiased and licensed appraiser will also inspect your home. Their goal? To determine the fair market (true) value of the home.
While homes regularly sell for more than they’re “worth” (especially in the current market), it’s good to know that you’re getting a good value when you buy.
An appraiser will take the following into account when calculating the value of the house:
● Square footage
● Number of bedrooms and bathrooms
● Location, including the ZIP code and neighborhood
● Lot size
● Condition and age of permanent fixtures in the home such as the foundation, walls, ceilings, fixtures, garage doors, landscaping, windows, and carpeting
An appraisal is almost always required by a lender before final loan approval. Lenders want to ensure the amount you’re asking to borrow makes sense. If there is a large discrepancy between the appraised value and your mortgage amount, you could be asked to provide a larger down payment. If it’s a bigger difference than you’re comfortable with, you could also ask to revise the purchase offer.
The cost and who pays
Buyers typically pay for appraisals, which cost between $300 and 500 on average. This fee is usually due at closing, though you can also pay up front.
It can seem like there are never-ending expenses when buying a home. Having a certified inspection and appraisal, though, are two that are well-worth the cost. Both help buyers to ensure the home is exactly what’s expected and that there won’t be any unexpected surprises after closing.