Getting the Home Inspected and Appraised

After your offer to purchase a home has been accepted you must arrange for the home to be inspected. This is the buyers responsibility an normally you will need to pay all the costs of an inspection, though you could possibly negotiate with the seller to pay half.

A qualified building inspector should be hired to complete this task. Their inspection report will indicate the condition of the home. The structure of the home will be examined along with the plumbing, heating, and electrical systems. The inspection is necessary to ensure you are getting what you are paying for in the home. and that there are no unexpected and costly surprises after you take possession of the home.

Your mortgage lender may also insist on an appraisal of the property. Again this is your responsibility and is done at your expense. The appraisal will assess the value of the home. Your mortgage lender wants to be assured there is sufficient value in the property to warrant loaning large sums of money.

Do not be surprised if the appraisal value comes in lower than the price you are paying for the home. Appraisals typically are about 10% below actual market value. This is partly a function of real estate market conditions and the appraisal process.

The appraiser will compare your home with comparable homes that sold recently in the area. Much of this information may be 3 or more months old, and, in a hot housing market those previous sales may no longer reflect the true position of the market. Appraisals also tend to be lower than market value because they are supposed to be a slightly lowball estimate of a properties value.

Lower appraisal values are also a bit of an insurance policy for both the mortgage lender and the appraiser. The mortgage lender wants assurances that the home is worth at least the appraised value in case you default on your loan and they need to liquidate the home to recover their money. It is also in the best interest of the appraiser to have their appraisal come lower than market value instead of higher. If the appraisal were to come in too high the appraiser could possibly face legal problems from the bank should the home owner default on the loan and the house is then sold significantly below the appraised value.

Inspections and appraisals should be completed in a timely manner. Typically a deadline is set in the purchase contract for all subjects and conditions to be met before the deal becomes binding. Inspections and appraisals should be included in this deadline.

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Napoleon Home Inspections have over 25 years of experience with inspecting homes in Barrie, Ontario and surrounding areas.

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