Whether you are buying a home for the first time or selling your current home you will very likely be exposed to an inspection or appraisal, possibly both. Each go through rigorous certification and licensing with the Texas Real Estate Commission (TREC) and must undergo continuing education. To begin, a home inspector and an appraiser are both paid to scrutinize your house from roof to foundation and everything in between. It is important to understand how these two processes work and how they differ in what each are looking at in a home.

Home appraisers and inspectors both visually examine and evaluate your home. The difference is, they’re looking at different parts for distinctly different purposes. Home inspectors focus on the condition of your home’s structure and systems to see that everything is functioning properly.

Appraisers, on the other hand, evaluate your house to determine its value, or how much your home is worth in the current local market. While your home’s overall condition does play a part in the appraisal process, condition isn’t an appraiser’s primary objective.


What is a home inspection?

A home inspection is a little bit like having a check-up with your primary care doctor — the home inspector investigates the general health of your home. A home inspector goes into your home with a detailed check sheet of items that need to be inspected or run to obtain information about the actual condition of the property. For the home inspector it’s about the function and operation of the components and systems in the home as well as their life span. A good example is a water heater that will generally have a normal service life from 15 to 20 years and a home inspector will record the date of manufacture to get a rough idea of the remaining service life.

After examining the visible and accessible areas of your home structure and systems, from roof to foundation, the inspector will present a written report of their findings, along with accompanying recommendations, observations and photos. In addition to the condition of the home the inspector will typically note how the element have been maintained, and how much more maintenance could be expected.

In a home sale, it’s customary for the homebuyer to commission and pay for the home inspection. However, some sellers hire a home inspector before listing their home to conduct what’s known as a pre-listing home inspection. In this case, the seller pays for the inspection. Note that we called it a “pre-listing home inspection” because if performed after the home is listed the inspection report MUST be divulged to a buyer which could adversely affect an offer.

What is a reasonable price to pay for a home inspection? The typical price we see for inspection of a home up to 2,500 sqft is from $350 to $450 and increase with the home square footage as well as additional components or equipment in the home. The price varies based on your market, size of home, distance or travel time for the inspector, and type of home structure for instance, a condo may cost less than a detached single-family house. Homes with pools or spas, solar equipment or other less common items may be slightly more expensive and may require inspection by a pool contractor, for instance.

Bottom line for sellers: The primary purpose of a home inspection is to identify potential defects or problems with the house that the buyer may object to.


What is an appraisal?

If you’ve ever watched the TV show “Pawn Stars©,” you already havethe basic premise of an appraisal. Customers stroll into the pawnshop ready to sell grandma’s antique spoon set. Before he decides whether to buy the spoons, shop owner Rick must answer the question: How much are they worth?

Likewise, home appraisals are an “expert and knowledgeable” opinion of value. What is the market value, or the amount someone will pay for your home on the open market? An appraiser dives into public data records and recent sales of similar, or “comparable”, homes, for key data points that help the estimate your home’s market value – much the same process as your Realtor will use to develop your Comparative Market Analysis (CMA) to evaluate the appropriate market value to set the initial asking price.

In a home sale, the buyer’s lender may require an appraisal as a condition of the buyer’s loan. It’s a way for the lender to protect their investment and help ensure they don’t buy into a property that they could be upside down in if the buyer defaults on the loan. The lender wants to ensure they can recover their investment, should the lender be forced to sell the property and the buyer would surely not want to overpay for the property. The appraiser’s valuation is intended to verify that the approved loan doesn’t exceed the value of the property. A homeowner may hire an appraiser before a buyer is involved to complete a pre-listing appraisal, although as previously mentioned the listing Realtor will do this as part of the listing agreement to assist in deciding on a list price. In some cases, a seller may decide to hire an appraiser for a unique home where comparable homes are scarce. Appraisals can also be used to value property assets in estate planning and divorce proceedings.

During a traditional appraisal, the appraiser evaluates both the interior and exterior of the property. Alternative appraisal types exist, such as an automated desktop or “drive-by” appraisals, where interior evaluations aren’t required.

Bottom line for sellers: A home appraisal is a professional report that answers the question, “what’s my house worth?”

In our next blog we will address more on inspections and appraisals including what the inspector and appraiser are looking for and their end goals as well as how to prepare for each one. Stay tuned – there’s much more to come on Home Inspections and Appraisals. Meanwhile, feel free to check out our website at www.genimanning.com and a General Home Inspection Checklist. We also share our Preferred Vendors with you and we are always here to help and answer questions.

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We’re always interested in your feedback or suggestions on topics you’d like to see in a blog or in our newsletter, feel free to let us know at RealEstate@GeniManning.com.