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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