Step 6: Conduct Inspections and Appraisals


When buying a home, completing inspections and appraisals is a crucial step that helps protect your investment and confirms that the price is fair.  In your written offer, it’s recommended to make the home purchase contingent on the results of the inspection and appraisal. This means that your offer is dependent on these two factors being satisfactory. If the inspection reveals significant issues or the appraisal comes in lower than the agreed price, you’ll have the option to renegotiate the price, request repairs, or back out of the offer.

The Home Inspection

A home inspection is crucial to identify any potential issues with the property. Hire a licensed inspector to examine the home's structure, systems, and overall condition. The inspection report provides detailed information on the home’s condition. This information can guide your next steps, such as moving forward with the purchase, requesting repairs, or reconsidering your offer if significant problems are discovered. Common areas covered in a home inspection:

  • Foundation and Structure - checking for cracks or signs of settling that could indicate structural issues
  • Roof - examining for leaks, damage, or worn-out materials

  • Plumbing - ensuring pipes, faucets, and water heaters are in good working condition

  • Electrical Systems - checking wiring, outlets, and electrical panels for safety

  • Heating and Cooling Systems - verifying that HVAC systems are functioning properly

  • Appliances - testing built-in appliances like stoves, dishwashers, and garbage disposals.

 

The Appraisal Process

An appraisal is an independent assessment of the home’s market value, conducted by a licensed appraiser. Unlike an inspection, which focuses on the home’s condition, an appraisal considers factors that impact market value, like the home’s location, size, and comparable property sales in the area - read more about the appraisal process.

 

Addressing Issues

Outlined below are the steps for completing inspections and appraisals, if the inspection or appraisal reveals significant issues, discuss your options with your agent. You may need to renegotiate the terms, request repairs, or even walk away from the deal if the problems are too severe.

  1. Schedule the Inspection - once your offer is accepted, arrange for a home inspection as soon as possible - if necessary, your real estate agent can typically provide inspector referral(s)
  2. Attend the Inspection - if possible, attend the inspection to ask questions and see any issues firsthand.
  3. Review the Inspection Report - carefully review the report with your agent. Depending on the findings, you may decide to request repairs, ask for a price reduction, or withdraw your offer.
  4. Order the Appraisal - your lender typically arranges the appraisal. Ensure it’s scheduled promptly to keep the buying process on track.
  5. Review the Appraisal Report - if the appraised value matches or exceeds your offer, you can proceed confidently - if it’s lower, read this article for available options.  

Once the inspection and appraisal are completed and satisfactory, you’re one step closer to closing the deal. You’ll have confidence that your new home is in good condition and that you’re making a sound investment.

 

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The Home Buying Journey: A Step-by-Step Guide 

 

 

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