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.
An appraisal
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.
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