Home inspections, appraisals, and closings, oh my! Aspects of the homebuying process can seem frightening, so knowing what to expect can prepare you for what’s ahead. Here’s a breakdown of three vital parts of the process.
Home Inspection
- This is the last opportunity to check for defects within the house prior to committing to the purchase
- Usually takes place 7-10 days within initial offer
- The home inspector is typically hired and paid by the buyer
- The home inspection takes approximately 2-4 hours to complete
- The inspector will look at plumbing, electricity, and overall foundation of the home
- The inspector will send the buyer an inspection report with their findings; this includes pictures, analysis, and recommendations
- Home inspections are not required (unless required by a specific down payment program); however, they provide the buyer with important opportunities to minimize unpleasant surprises and difficulties
- Depending on the inspection report, buyers can use it for negotiation on features that need repair or replacement
Appraisal
- An appraisal is an evaluation of the property by a third party
- Buyers usually cover the cost of the appraisal
- Lender orders appraisal prior to closing to ensure home is worth at least as much as what the buyer is committing to paying; buyers are not permitted to select their own appraisal company
- The appraiser will compare recent sales of similar properties, market trends, and conduct an in-person inspection of the home; this is different than the home inspection
- If the appraised value matches or is higher than the contract price, the transaction can continue as planned
- Some sellers will lower the listing price to match the appraisal; other sellers may disagree with the appraisal and refuse to negotiate
- If a seller refuses to negotiate, the buyer can either make up the difference or request another appraisal; it’s up to the lender to approve the second appraisal; if denied, the buyer can walk away from the deal
- The appraisal process can take days to weeks to complete; if the buyer or seller requests a second appraisal it will take longer
- The appraisal is important because it allows both the lender and buyers feel comfortable with the investment
Closing
- The closing process finalizes the home purchase
- During closing buyers sign several legal documents and pay any additional fees; some fees are recurring costs like property tax; others are one-time closing cost expenses that can include:
- Loan origination fees
- Application fee
- Mortgage broker fee
- Title insurance
- Appraisal fees
- Title search fee
- Other miscellaneous payments
- Our ReadyClose process allows you to sign the majority of your closing documents from home, saving you time in the process!
