When it comes time to buy or sell a home, there are a lot of industry terms and processes to know about, and it’s our job at Clairwood Real Estate to explain the entire home buying and selling process and guide our clients through each step of the way. For example, when it comes to home inspections and home appraisals, those terms can sometimes get confused. Let’s break it all down and have a more in-depth look at both so you’re more ‘in-the-know’ and less ‘out-in-the-cold’.
Home inspection basics
The first thing to know about home inspections is that they are for the benefit of the home buyer, not the seller. A home inspection is an optional (but highly recommended) step for anyone who wants to know more about the condition of the home before finalizing the sale and signing on the dotted line. A house is typically the biggest asset we own; we put years worth of savings and hard work into our homes! We want to know it’s going to be safe and healthy to live in, and also that it’s in overall good repair with no big surprises coming our way such as a cracked foundation, termites, a leaky pipe, and so on. A home inspection will alert the potential buyer of any concerns and repairs needed and roughly outline what those might entail; helping the buyer come to a ‘deal or no deal’ decision.
Just the facts
Secondly, home inspections aren’t about financials or the value of the home; they are strictly about the current condition or wear-and-tear on the house from an objective, trained eye. An inspector will provide a report focusing on each area of the home from top to bottom including recommendations for needed repairs or renovations. The value of the home or detailed repair costs aren’t part of the report (although rough estimates may be provided). It’s also not about the décor of the home; a home inspection is about nuts and bolts, brick and mortar. Finally, it’s important to know that in Ontario, home inspectors are not closely regulated. Although recent legislation was passed to ensure home inspectors were licensed, it’s still a good idea to do thorough research before signing on with a home inspector; make sure they have your best interests at heart at all times. Your Realtor® will have some recommendations for you as well, as they work with various industry professionals as part of their job.
Understanding home appraisals
Although Realtors® can provide a CMA (Current Market Assessment) or a letter of opinion of value, only an accredited appraiser can do an actual appraisal. A CMA is the initial, more informal assessment to evaluate a home’s financial worth to give the seller an idea of what they may expect to list their home at. It often requires a tour of the home, and an assessment of recent statistics on sale prices of similar homes in that neighbourhood. However, a formal appraisal is conducted by an accredited appraiser when a mortgage is required. Lenders want to ensure a very accurate market value is given to the home for which they are providing the loan, as this protects their financial interests. They need to know that what they are financing reflects the true value of the home. With this in mind, it makes sense that most appraisals keep the lender’s best interest at heart, and not the buyer or seller.
Home appraisals – the details
Appraisers will inspect the home and consider the location, nearby amenities, the neighbourhood, and also look at recent sale prices of similar homes in the vicinity. Sometimes, an appraiser doesn’t have a lot of recent information to work with, especially for some rural communities or very unique homes. In these cases, more work may be needed.
The final word on home inspections and appraisals
Wherever you may be on your home buying or selling journey, it’s important to work with industry professionals; it can be a very complicated process, particularly dealing with listings, offers and understanding closing costs. When you work with a Realtor® you trust, you know we have your best interests at heart. If you’re in the wonderful region of the Georgian Triangle, Grey County, Collingwood, Blue Mountain, Wasaga Beach or Meaford, connect with us! We understand the nitty, gritty details of a successful home sale; call on the trusted experts at Clairwood Real Estate at 705-445-7085; we’re here for you. .