putting an offer on a house

Home Inspections and Appraisal Process

Chapter 5

What to Expect With Home Inspections and Appraisal

Once your offer is accepted on a home, you’ll have a few weeks to conduct a full home inspection and appraisal before closing on the house. Inspections are vital since they’ll determine any major damage to the home that needs repairs, while appraisals are important for mortgage approvals to confirm the house is worth the price.

So, does a home inspection or appraisal come first? Typically, even though a home inspection isn't always required, it's a good idea to have the inspection done before your appraisal. Why? Well, if the inspection comes back with major, expensive issues, you may not want to go through with purchasing the home. Having the inspection done first can save you money on an appraisal, which can get pricey. If you were to get the appraisal done first only to find out during the inspection you don't want the home, you might be out $500 or more.

Understanding the process and costs of a home inspections and appraisals can be tricky, but is important since they are key pieces in your home buying journey.

So What Exactly Is a Home Appraisal?

A home appraisal is an estimate of your property’s value, based on factors like age, condition, building materials, neighborhood and sales of comparable nearby homes. Using these and other factors, the appraiser provides an analysis and conclusions about your property's value.

The home appraisal report usually includes:

  • A street map showing the appraised property and comparable sales
  • An exterior building sketch
  • An explanation of how the square footage was calculated
  • Photographs of the home's front, back and street scene
  • Photographs of each property used as a comparison
  • Other information that the appraiser uses to determine fair market value, such as market sales data, public land records and public tax records

Who Performs Home Appraisals?

The home appraisal process is conducted by third-party certified or licensed contractors hired by the lender. While they should be knowledgeable about real estate values, federal regulations also require them to be impartial and have no direct or indirect interest in the transaction. Don't be shy — it’s always OK to ask the appraiser if they’re certified and if they work with more than one lender. If the appraiser only works with one other lender, they may have outside interests — which could lead to an incorrect assessment.

What Does an Appraiser Do?

A visit from the appraiser usually looks like this:

Walk Through the Property

They’ll walk through the property and run through a checklist identifying the value of the home and items that alter that value, which can either shift it up or down. You’re encouraged to walk with them — you’ll learn a lot!

Review Financial Data

They’ll review recent sales of similar properties and current market trends.

Assess the Home

They’ll assess things like the home’s amenities, number of bedrooms and bathrooms, floor plan functionality and square footage.

Consider the Potential Issues

They’ll take note of conditions that adversely affect the property’s value, such as needed repairs.

Take Photos

They’ll take photos of your home and property’s layout.

Who Pays for Home Appraisals?

The buyer usually pays the fee at closing, although the seller can opt to pay it up-front. Typically, appraisals cost a few hundred dollars, although the property value, location and size can impact that cost.

How Long Do Home Appraisals Take?

A typical property assessment takes a few hours — and if you’re a buyer, you’re encouraged to stick around since it’s a great opportunity to learn more about the house! The reports can be expected within seven business days, though a busy market can slow turnaround times. The appraiser provides the final report to the lender, who will share it with the buyer.

What Is a Home Inspection?

A home inspection is an examination of the condition of a home that helps identify any damage or repairs needed before the sale of a home. While it’s important for you to pay attention to potential damage in each home you visit, a home inspection is conducted by a certified home inspector.

What to Expect From a Home Inspection

A home inspector does a thorough examination of your home that includes looking at its exterior and interior. They’ll take a close look at the home’s structural integrity, the roof, plumbing and electricity, and many other features of the home.

Home Inspection Checklist

Take a look at our detailed checklist that highlights the types of things your home inspector will look for.

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How Long Does a Home Inspection Take?

Home inspections usually take two to three hours, but the time to complete the inspection depends on a number of things, like how large the property is, the condition of the house and inspection requirements by state.

How Much Does a Home Inspection Cost?

According to HomeAdvisor, the national average cost of a home inspection is around $325. The cost will differ depending on things like the size of the home, age of the home and any required testing for mold, asbestos or radon. Ask your inspector upfront how much they’ll be charging you.

Who Pays for a Home Inspection?

Typically, the person planning on buying the home pays for the inspection, however, the cost of a home inspection may be included in the negotiation phase or closing phase of the process. In this case, the seller would be covering the cost. Whatever the case, make sure you and the seller communicate who is paying for the home inspector and who is conducting the inspection.

Keep in mind that the appraisal and home inspection are important to ensure you’re not paying more than the home is worth. You can choose to be involved in the appraisal or inspection and ask as many questions as you’d like.

More Chapters in This Guide

Steps for First-Time Home Buyers

Not sure where to start when buying a home? Our first time home buyer guide explains what you need to know about buying your first home. Learn more today!

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Saving for a Home

Saving money is one of the most important steps to buying a home. Learn how to save up for a down payment for a house with our first - time home buyer guide

Chapter 1 >

Understanding Loans and Mortgages

Buying a house but confused by financing? Learn about the different types of home loans and mortgages with our first-time home buyer guide.

Chapter 2 >

How to Start Looking for a House

Starting to shop for homes but don't know where to start? Learn about what to look for when buying a house so you can find the perfect home for your needs..

Chapter 3 >

Putting an Offer on a House

Found the home of your dreams and want to place an offer? Read our tips for making an offer on a house and learn how much to offer to stay competitive in the market

Chapter 4 >

The Home Inspection and Appraisal Process

What can you expect from the home appraisal and inspection process? Our homebuyer guide is here to help demystify home inspection and appraisals. Check it out today!

Chapter 5 >

Understanding Homeowners Insurance

Choosing the right insurance policy for your new house is another important step in the home buying process. Learn about how homeowners insurance works and find the best coverage for your home today.

Chapter 6 >

What to Expect on Closing Day

Closing on a house is an exciting yet hectic time, but don't worry. Our closing day checklist and tips can help you succeed. Learn more from American Family.

Chapter 7 >

What to Do After Closing on a House

Congratulations! You've closed on your home and can start making it your own. But there are a few final steps you'll need to take. Use the following resources to make your transition into your new home as smooth as possible.

Chapter 8 >

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