Patricia M. McCorry, JD, CRB, GRI's Blog
There is a lot that goes into the buying and selling of a home Not only are there many steps to take but it can feel like there is a report for everything. It’s easy to forget what they are or why they are necessary.
Three processes that seem similar to home buyers are the home inspection, comparative market analysis, and the appraisal.
Here’s what each them is and how they are different:
First, let’s look at the home inspection.
The home inspection
What it is:
This is probably the one you are most familiar with and have heard the most about. During a home inspection, an inspector is paid to come and test all of the appliances, outlets, plumbing as well as the heating and cooling system.
What this information is for:
This information is for you the buyer, It is to help make a well-informed decision as to whether the investment you are making is worth the current state of the home. Whether there be repairs that will have to be made or replacements that will need to happen down the line.
The custom market analysis or CMA
What it is:
A sales report your real estate compiles using data they have exclusive access to. This data is compiled into a database used solely by other real estate agents.
What this information is for:
A CMA is used by you and your agent to determine if an asking/selling price is fair. You’ll be able to compare the pricing to other listings and conclude whether it is higher, lower or on par with other offers. This is incredibly useful no matter which end of the spectrum you plan on selling or buying.
What it is: A licensed appraiser comes to visit the home and inspect it solely for value. This is determined by the location, state of and surroundings of the home. Your potential home will be compared to other similar properties in the area to come to a conclusive value.
What this information is for:
The final approval of your mortgage terms by your lender. If the determined value is much lower than your offering price you can be declined a mortgage.
As you can see, each of these processes has varying impact on the final purchase of your home. The information obtained from a home inspection is up to solely your discretion. That gathered from the CMA helps you to determine where the asking price of a home is sitting in comparison to others on the market. And in turn, whether you’ve got a really great deal on your hands or an inflated price. And lastly, perhaps the most important is the appraisal. The information gathered from this process is what your lender uses to determined whether or not to lend you the requested amount.
The home inspection may seem like a standard thing that you need to go through in the process of buying a home. Really, you’re paying for the home inspection, and it’s a huge opportunity for you. As a home buyer, you should look at the home inspection as an educational event for homeowners. You’ll learn a lot about the history of the property that you’ll be living in. From water that may have been present in the basement to a leaky roof, you’ll get to know your new home and how everything works.
When you hire your home inspector, he or she may seem like they are talking to experts. For this reason, it’s a good idea to ask questions during the inspection so that you can clarify what the inspector is talking bout.
Is This Problem Urgent?
It’s a good idea to see how soon any problems in the house need to be fixed. If the roof needs to be replaced within 3-6 months and your finances are tight, it’s something that you’ll want to know about. While home inspectors will reserve their opinions about a property overall, professionally, they can tell you how big of an issue certain things are. You may need to hire a certified professional who specializes in a certain area like plumbing or electricity for further evaluation in many cases. For your own knowledge, it’s a good idea to know what needs to be done around the property and when.
You’re never going to remember where everything is in the house on the first pass. It’s a good idea to carry a notepad with you when you’re going through the home. Make notes of any major issues, where they are, and how to fix them. This way, even after the inspection report is sent, you’ll have something to refer back to.
Is This At The End Of Its Lifespan?
Your home inspector will take a look at all of the moving parts of the home that you’re about to purchase. This includes the appliances. Is the dishwasher on its last leg? Will you need a new refrigerator very soon? Is that creak in the floor more than just a problem with a floorboard? If you find out what to expect from both the major and minor issues in the home, you’ll have a better idea of what to expect from the property overall.
Home inspectors give you an overview of the condition of a home. Inspectors will tell you that there is no home that comes completely clean when it comes to an inspection. Even a brand new home that was just built will have some issues. While it may not be the most fun to find out that your new home needs a new roof, at least you and your realtor will know what needs to be brought to the negotiation table if you decide to go through with the purchase of the home.
A home inspection can make or break a property sale. If all goes well during a home inspection, a buyer and seller can proceed with a transaction. Conversely, if a home inspector discovers major problems with a house, a property sale may be in jeopardy.
As a homebuyer, you'll want to do everything possible to ensure a home inspection delivers valuable insights. With in-depth home insights at your disposal, you can determine whether to continue with a home purchase or reenter the housing market.
To ensure a successful home inspection, let's take a look at three common home inspection mistakes, and how a homebuyer can avoid these problems.
1. A homebuyer hires an inexperienced home inspector.
When it comes to hiring a home inspector, it is always better to err on the side of caution. With an experienced home inspector at your side, you can boost the likelihood of a successful home inspection.
Evaluate a variety of local home inspectors. Then, take a look at each home inspector's background and expertise to narrow your search.
In addition, if you feel comfortable with a home inspector, reach out to this professional directly before you make your final hiring decision. That way, you can request client referrals and gain additional insights to help you make an informed selection.
2. A homebuyer does not attend a home inspection.
A homebuyer is not required to attend a home inspection. However, attendance usually is a good idea, regardless of your homebuying expertise.
Remember, a home purchase is one of the biggest transactions that you likely will complete in your lifetime. If you want to ensure a home is a viable long-term investment, it certainly pays to walk around a property with a home inspector and conduct an in-depth evaluation.
In many instances, attending a home inspection may enable a homebuyer to gain home insights that might not be included in a home inspection report as well.
For example, a home inspector who identifies issues with a property may be able to give a homebuyer an estimate about how much it will cost to complete myriad property repairs. These insights are exceedingly valuable and can help a homebuyer determine whether a house is a worthwhile purchase.
3. A homebuyer ignores a home inspection report.
After a home inspector completes a property evaluation, this professional will provide the homebuyer with a home inspection report. Then, a homebuyer will have a set amount of time to review the report to determine whether to proceed with a home purchase.
A home inspection report contains plenty of valuable insights, and as such, should not be ignored. Instead, a homebuyer should spend time evaluating the report and learning from it. And if a homebuyer has any questions, he or she can reach out to the home inspector who provided the report for answers.
Lastly, if you need help planning a home inspection, you should employ a real estate agent. By hiring a real estate agent, you'll have no trouble getting in touch with the best home inspectors in your area.
Once you start the process of buying a home, you may begin to feel as if you know everything there is to know about real estate. There’s so much house hunting, researching and negotiating that the process can be dizzying. Once you get into a contract and start the home inspection process, a whole new host of questions comes to the table. Now, you need to know the nitty gritty of what you’re about to buy.
Once you hire a home inspector, it could seem like they are speaking an entirely different language. These inspectors will be looking for any and all potential problems with your new dream home. In order to get the most out of your home inspection, you’ll want to ask smart questions.
How Much Of An Impact Does This Have?
Home inspectors cannot legally tell you whether a property is “good” or not. They can only tell you the things they find wrong with the property, or where they see a need for improvement. These inspectors will seem pretty even keeled when you meet them, so they can be hard to read. They’re all about facts. Asking them what kind of an impact a certain problem will have can help you to make a more informed decision.
Who Can Fix This?
In many states, home inspectors cannot legally make repair recommendations. They can however give you an idea of how easy or how complicated it may be to fix something. You may find that you’ll be able to make simple repairs on your own rather than hire someone for a big price. The only drawback is that home inspectors cannot actually “fix” anything for you. They can only give advice.
What’s A Priority?
Your home inspector can give you an idea of what issues in the home you are about to buy need to be fixed first. Since the inspector's job is to point out absolutely everything- both big and small- you’ll want to know what has the biggest priority so that you can plan accordingly. If things are at the “end of their lifetime” rather than in need of a simple repair, you’ll understand as a homebuyer how much money you’ll need to shell out for repairs sooner rather than later.
Where Is That?
Many times as home inspectors as heading through the property, mentioning things that need repairs and attention, you may have no idea what they are referring to. It’s a good idea to have a notepad and and a camera so that you can refer back to what the inspector was talking about. Some inspectors even insert digital pictures into their reports, so you can ask about that when you’re hiring an inspector.
How Does That Work?
Inspectors can often give you an idea of how different moving parts of the home operate. If you’re new to homeownership, or come across something that you have never seen before, your inspector will be happy to help you figure it all out. It can be a lifesaver once you move in since you’ll already know how much of the house operates.