Appraisals
and Inspections
When
you are buying a home you will want to know
two things, if you are paying the right price,
and if the condition of the home is as promised.
To determine the value of the home you may need
a professional appraisal. If you are taking
out a mortgage loan the lender usually requires
a professional third party appraisal of the
home to determine the lending value.
Appraisal
A
real estate appraisal is quite different from
a property inspection, although they do overlap
in their scope and procedure. A real estate
appraisers job is to determine the value of
the property. Usually the appraiser is estimating
the market value of the land and building for
mortgage lending purposes. Often the scope of
the appraisal does not include a detailed property
inspection, in many cases an estimate of the
value can be reached without a comprehensive
inspection of a residential property, particularly
if most of the value is in the land and not
the building. For mortgage lending purposes
the financial institution may only require a
determination that the property is sufficient
security for the mortgage. Mortgage lenders
are also concerned that the condition of the
property is such that costly expenditures on
repairs or renovations will not cause an unmanageable
financial drain on the borrower. Home buyers
are increasingly turning to property inspectors
to insure that the home not only represents
good value for the purchase price but is also
in good shape.
Inspection
The home inspector offers no opinion on the
value of the property. Their function is to
inspect the adequacy and condition of the building
and all major systems. A home may be of sufficient
"appraised" value to get the mortgage,
but a closer look at the building and systems
may reveal that costly repairs are on the horizon.
Your inspection will point out any red flags
and areas of concern. Many inspectors will supply
you with a schedule outlining the estimated
cost to remedy or repair the problems noted.
In addition most inspections will estimate the
timing of any suggested repairs and prioritize
the seriousness of any adverse findings. Armed
with this information the purchaser can then
make an informed decision on whether or not
to proceed with a purchase offer.
It
is important to hire a qualified and experienced
home inspector. In Canada the home inspection
industry is, for the most part, self regulated
by a number of trade organizations. Contact
one of these organizations to refer you to a
home inspector.
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