Your home is one of the biggest investments you’ll ever make, and getting a professional evaluation of its condition and value prior to closing is critical.
The Importance of a Home Appraisal
Once your offer is final, your lender will order an appraisal to get a professional opinion on the value of the home — versus how you and the seller value the home.
The home appraisal is a necessary step in getting your financing secured, and it protects you and the bank by making sure the home’s value matches the agreed upon sale price. For example, your lender doesn’t want to lend $200,000 on a home that’s only worth $175,000, and you certainly don’t want to pay $200,000 for a home that’s worth much less.
You may want to consider including an appraisal contingency in your purchase offer. If the appraisal report shows that the home’s value is lower than your offer, an appraisal contingency can allow you to walk away from the home purchase or renegotiate your offer price.
Learn more about what to expect with a home appraisal.
In your written offer, it’s highly recommended that you make the home purchase contingent on the appraisal and inspection.
The Importance of a Home Inspection
The home you want to buy looked pristine and perfect when you saw it with your real estate agent. So why bother with a home inspection? It’s simple: What if there is an underlying issue with the home that you can’t detect, such as an imminent plumbing issue that could cost thousands of dollars to fix?
A home inspection gives you the opportunity to have the home thoroughly examined by a professional before you buy it.
Paying for a home inspection can be well worth it both for peace of mind and the potential to avoid costly trouble in the future. You can choose your own inspector, and your real estate agent should be able to recommend several well-qualified home inspectors if you need assistance.
If the inspector finds issues, you can work with the seller to determine if they need to pay for repairs. Or, if you have a home inspection contingency, you have the option to renegotiate the sales price, require the seller to make repairs, or back out of the offer.