Once your home is on the market and potential buyers are checking things out, it’s easy to get caught up in the excitement and forget some of the stepping stones you will encounter on your home sale journey. Keeping an eye on the big picture after an offer has been accepted is of utmost importance, and we’re here to help with 4 things home sellers in Riverside need to know about inspections and appraisals.
One of These Things Is Not Like the Other
Inspections and appraisals are two separate walkthroughs that provide different results.
First, an inspection is handled by a licensed home inspector in order to check the overall condition and function of the home. Intended to be done alongside the buyer, the inspector goes through how the utilities function in the home while looking for any major defects that could have a strong negative impact on the new owner’s quality of life.
This acts as a protection for the buyer to prevent purchasing a property with less obvious, but still major, flaws, while also educating them on how to get the most out of their possible new home.
On the other hand, appraisals are done to determine the value of your property. A licensed appraiser will visit the home to get an idea of the general condition of both the interior and exterior while making notes of any features, such as chimneys, attached or detached garages, or replacements windows and doors. They then go back to their office to thoroughly research the price of similar homes in your area and create an all-encompassing analysis of the value of your property.
In short: the inspection focuses on the function and bones of a home whereas the appraisal is directed at establishing the best estimate of the property’s value.
Appraised and Market Value
If an appraisal is done to determine a property’s value, this must mean that’s how much you can expect to get for your home, right?
Appraised value has been determined, but the real market value is what really matters when selling your home. Market value is figured out based on how much your buyers are willing to pay to purchase the home.
Appraisals are more of an educated analysis and market value is based more on individually perceived value, feeling things out, and negotiation. It’s a common misconception for home sellers to believe they should, at the very least, receive offers equal to or greater than an appraised value.
To put it bluntly: things do not always work that way.
Are Both of These Necessary?
The simple answer to this question is that, if both buyer and seller want to go through a comprehensive and careful real estate transaction, then yes.
It’s also extremely likely that your average homebuyer will be getting their financing through a mortgage lender. Nearly every lender will require both an inspection and appraisal to be done on the property prior to approving the financing for the buyer and allowing the transaction to close.
The reason for this is to cover any liability on the part of the lender in the event they take on ownership of the property. A lender doesn’t want to then be stuck with a structurally unsound home that is valued substantially lower than the financing they provided for the buyer.
Preparation Is Key
As a seller, you want both the inspection and appraisal to go off without a hitch.
This could mean doing minor repairs before putting your home on the market, doing a substantial deep cleaning and decluttering, mold abatement, or cleaning up your landscaping to maximize curb appeal.
Every little bit will help the outcomes of both of these events, and can certainly make a big difference in the ease and speed of selling your home.