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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