When you decide to buy your first home, you’ll encounter various terms and conditions that might be unfamiliar. While you may have a basic understanding of what an inspection involves, you might not know why it’s necessary or how it differs from an appraisal. Here’s a simple explanation of each process and what they mean for you as a homebuyer.

Home Inspection
After you’ve secured a contract on a home, an inspection becomes a crucial step in the buying process. An inspection provides you with a detailed assessment of the home’s safety and overall condition, which is vital for such a significant investment. As a recent article from Realtor.com explains:

“A home inspection is something that protects your financial interest in what will likely be the largest purchase you make in your life—one in which you need as much information as possible.”

If any issues arise during the inspection—such as an aging roof, a problematic HVAC system, or other concerns—you can discuss and negotiate these potential issues or repairs with the seller before finalizing the transaction. Rest assured, you won’t have to handle this alone. Your real estate agent will act as your advocate, negotiating with the seller on your behalf.

Home Appraisal
While an inspection informs you about the current condition of the home, an appraisal determines its value. According to Bankrate:

“When buying or selling a home, an appraisal verifies that the sale price of the home is in line with fair market value. This ensures the homebuyer doesn’t pay more than the home is worth, and the mortgage lender doesn’t lend more than it is worth.”

No matter how much you’re willing to pay for a house, if you’re using a mortgage, the appraisal protects you from overpaying and safeguards the bank from lending more than the home’s value.

If there’s any confusion or discrepancy between the appraisal and the agreed-upon price in your contract, your real estate professional will assist you in navigating any additional negotiations to reconcile the difference.

Bottom Line
Both the inspection and the appraisal are essential steps when buying a home, and you don’t have to manage them alone. Connect with an agent today to receive expert guidance throughout the entire process.