Preparing for a Home Appraisal and Home Inspection

Whether it’s the first time you need a home appraisal or home inspection, or you’ve done this before, chances are, you’re a little nervous. When you’re applying to refinance your home or need to have your home appraised before a sale that will get you into your next home, it’s a big deal.

It’s completely normal to be anxious about the process of getting your home appraised. But there are some tips and tricks you can use to make the process quicker, easier, and more successful.

Home loan inspection

What Is a Home Appraisal?

When you seek financing for a home, the company that is lending you the money needs to ensure that the investment makes sense. To do that, they need to know that the amount you’re hoping to spend corresponds with the value of the property.

A home appraisal is one of the ways that they do this.

Home appraisals are a third-party process that is not connected to the buyer or the seller. This means that the person or company that does the appraisal is as objective as possible.

During a home appraisal, an appraiser will walk through the property, and assess the condition. An appraiser will take note of anything that can affect the value of the home, such as:

  • The condition of the property (both interior and exterior)
  • Any additions or upgrades to the home
  • The size of the property lot
  • The condition of the electrical, plumbing, and HVAC systems

Then, they will look at other information about similar homes in your area.

This information, known as “comparables” is related to the selling price of similar homes in the area. The appraiser will look at any recent sales that went through in the neighborhood, and compare the size, condition, square footage, and so on.

Appraisals aren’t an exact science, but they are usually quite accurate, so this information is used by the lender to assess the offer. Most lenders can only pay up to 97% of the assessed value of a property. This means that if there’s an offer that’s higher than that, the difference will have to be financed out of pocket or by some other means by the purchaser.

What Is a Home Inspection?

A home inspection is less about what a property is worth, and more about potential problems with its condition, which might be costly to repair.

An old or damaged roof, for instance, and visible signs of water damage would be a major red flag during a home inspection. As would visible signs that the plumbing or electrical is faulty or outdated.

Home inspectors will look at important, big-ticket items, like foundations and basement walls, drainage problems, signs of settling, and other structural and construction-related problems.

After the home inspector has visited the home and made a list of their findings, the buyer will be able to adjust or even withdraw their offer, if their offer was subject to inspection.

Home inspections are very important because even if a property looks good on the surface, there could be costly problems hiding just below the surface.

Additional Read: How Does A Home Inspection Contingency Affect The Homebuying Process?

Why Should Borrowers Get an Appraisal and Inspection? 

If you are refinancing your property or purchasing a new one, your lender will require that you get an appraisal done. They want to be completely sure that you’re not offering more than the property is worth, and the appraisal is one of the ways they do this.

In fact, your lender will probably arrange the appraisal themselves, so you won’t have to do any of that on your own.

However, most lenders don’t require that you have a home inspection. But that doesn’t mean you shouldn’t get one.

Home appraisals only look at the surface, but a home can be cosmetically sound and still have some serious and expensive underlying problems. If you purchase a new home without an inspection, you could be on the hook for tens of thousands of dollars of repairs that weren’t visible when you and your appraiser walked through. Worse, in some cases, homes could be so badly damaged that they are structurally unsafe and not habitable.

If, after you purchase a home, it’s found not to be safe to live in, you would have to move out until it is repaired, or, if it can’t be repaired until it is demolished and rebuilt.

All of that could be very costly and very time-consuming. If you are borrowing to buy a home (or even buying one without financing), both an appraisal and an inspection are critical to the process.

Tips to Prepare Borrowers for an Appraisal Inspection

If you are in the process of selling your own home so that you can buy your next one, you’re going to have to get through the appraisal process too. 

Fortunately, there are some things you can do to make sure your own appraisal goes well, and your home is valued as high as possible.

Inside Your Home

 You might be worried that when your home is appraised, the person doing the appraisal will focus on every small imperfection. But that’s not true. They know your home is lived in, so a few toys in the living room or some dishes in the sink won’t be a problem.

However, if your home is far too cluttered, with very dirty carpets or chipped tiles and paint, you probably need to address those things.

Clutter will make your space look smaller, which won’t help your appraisal. Dirty or damaged flooring or fixtures can drive the price down a lot. In fact, anything that the new owner would need to fix, replace or renovate to make the space livable will reduce the price you can get for your home.

Outside Your Home

Curb appeal is one of the big factors that affect the price of any home. So, if your home and landscaping look tired and shabby, you need to spend some time refreshing them. Remove overgrown vegetation, add some color and make sure your lawn or lawn alternative looks great.

Toys, play structures, and garden tools in your yard won’t necessarily hurt your appraisal, but if the space looks unkempt or untidy, you might lose a few points there too. Make sure everything is reasonably organized.

If you have other exterior features like a pool, make sure it’s also well taken care of, and take note of what garages, sheds, and other outbuildings look like. Anything that looks expensive to fix will lower the appraised value of your property.

During the Appraisal 

It helps to be present when the appraiser visits, so you can answer any questions they might have. But don’t point out any things that you don’t like (like a room that’s too small or cabinets that are oddly laid out.) There’s always a chance that things that bother you won’t even be on their radar unless you bring it up, so don’t draw attention to them.

If you’ve made major improvements or there are some really attractive features the appraiser should know about, make sure you point them out.

If you know of any recent sales in your area that might be comparable to your property, make sure you mention them – and don’t be shy to point out how your property is better than those listings.

Finally, make sure that you keep pets and kids out of the way as much as possible. This can make the whole process easier and less stressful for everyone.

Contact A and N Mortgage

Appraisals and inspections are part of the process of buying and selling property. While they might seem like added stress and work when you least need it, appraisals and inspections protect you from potentially unforeseen expenses.

Without an appraisal, you risk buying a home at a price significantly higher than it’s worth. This would prolong your ability to start building equity. 

As a mortgage borrower, you might even be turned down if things go badly. If you skip the inspection process, you might be buying a serious problem that could potentially cost you a lot of money.

Whether you’re buying your first home or trying to sell your existing home to move up the property ladder (or to downsize!) these are crucial steps in the process.

That having been said, there’s no denying that these and other parts of the process of buying and selling property can be complicated, time-consuming, and confusing. Here at A and N Mortgage, we go out of our way to make things easier. Whether that means insider tips to make sure your home appraises higher, or how to find the best home inspector for your next property, we’re here to help.

So, if you’re in the market to buy, sell, and move on, make sure you give us a call. It helps to have the pros on your side! 

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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