While buying your house, you will have to deal with a building inspector for an inspection or an appraisal. Both processes help to reduce the risks involved. Although building inspections and appraisals require a third-party inspector, the two are not the same. Here are some facts you need to know about building appraisals.
What Is a Building Appraisal?
A building appraisal is a requirement for all mortgage approvals. The financial lenders require the appraisal of the prospective building to determine the actual value of the home before lending. In practice, the lender engages the services of a third-party inspector to undertake the building appraisal.
Building appraisal factors include:
The third-party inspector will visit the house, research for comparable factors, and then prepare and submit the appraisal report. The lender receives the appraisal report, but the borrower keeps a copy.
How Is a Building Appraisal Different from an Inspection?
Although a third-party inspector conducts building appraisals and inspections, there are significant differences between the two. A building appraisal focuses on the house's value using comparable factors, while an inspection only assesses the condition of a property. Notably, the lender requires an appraisal before lending but they do not require an inspection before lending. Thus, appraisals are the basis for securing the mortgage and not the inspection. The building inspector conducts the appraisal alone, meaning you get the results after the process. In comparison, inspections involve you throughout the process. However, both processes reveal factors that facilitate the decision to purchase a house.
Who Pays for a Building Appraisal?
Although the lender requests an appraisal and hires the third-party inspector, the borrower pays for it as part of their loan. This fact may seem unfair. However, both the lender and the borrower benefit from an appraisal. The lender learns the house's value before lending, and the borrower knows if it is worth the purchase. Notably, the third-party inspector is an independent professional — the borrower can trust the appraisal findings since there is no gain or loss for the third-party inspector.
Impact of a Building Appraisal
The building appraisal affects the lender and the borrower. The lender relies on the appraisal report for the house valuation. Thus, without an appraisal, the financier will not offer credit. Therefore, the lender looks at the value-to-ratio price of the house contract. A good appraisal means approval of the loan and ensures the borrower only pays the actual value of the building.
Building appraisals are an essential component of the house buying process. Through the services of third-party inspectors, an appraisal determines the property value, which acts as the basis for lending and buying.
To learn more, contact a company like South Star Services.
Share21 April 2021
It might not seem like it, but over the course of a lifetime, you can accumulate quite a lot of belongings. In fact, some of the objects might even be worth a lot of money, which is why it is important to have things appraised before you decide to sell anything. I began thinking about ways to unload some of my belongings a few years ago, and getting things appraised was a great first step. Check out this website to learn more about how the appraisal process works, how it can benefit you, and what you might need to do the next time you need to sell something.