If you have ever purchased a home, or considered selling a property, chances are you have heard the terms inspector and appraiser being thrown around throughout the process. These terms get used by the real estate industry quite often, and often without explanation.
When purchasing a home, usually the first steps for buyers are to view some pictures, consider the listing price, and then do a home tour. You get to go see the location, walk through the spaces, and maybe even make an offer. If you are lucky enough to go under contract, you then go through a phase referred to as “due diligence.” This is a timeframe during which the buyer will have different professionals involved to assist with making sure the home they are buying is a solid purchase.
Who do you hire, and why?
The first thing a home buyer will usually need is a banking partner for the loan. A bank will require a slew of information about the home to make sure the property they are loaning on is worth the amount of money they will be lending. How do they do that? They hire an appraiser.
An appraiser’s job is simple: to evaluate the monetary value. They will go view the property in question, collect data, assess the area and surrounding properties, and then create a report for the bank or lender. That data will then tell that lender the bottom line: Is that home worth that purchase price? In Steamboat, this process can be made even more complicated because of high market demand and rapidly increasing values that require a more thorough understanding of variables that are related specifically to the Steamboat market and to mountain homes.
“You have to look at all pieces of the puzzle,” says Billy Dalzell, co-founder and co-owner, of Ski Town Appraisal. “An appraisal is the valuation of the market value of the property based on a specific set of data, so it is statistical but sometimes the data is very apparent and sometimes it’s not.”
An appraisal does require intimate knowledge of the market in terms of assessing how variables like amenities, location, and rentability factor into the value of a property, especially in a market like Steamboat’s that has seen drastic value increases since 2020. And while things have “normalized” since the Covid-driven real estate boom, demand still outweighs the supply, and these variables all need to be factored in for the most accurate assessment of value. “An appraisal is going to give you the most objective, unbiased assessment of value,” Dalzell says. “This is going to be quite different from a value you might find on a site like Trulia or Zillow that is based on an algorithm. And it’s going to be far more accurate than what a property owner who has an emotional attachment might conclude.”
A home inspection, on the other hand, is considerably more straightforward, but no less thorough. “An inspection is a complete visual inspection that will include many factors an appraisal won’t even consider,” Dalzell says. A home inspector will go to the home and their job is literally to inspect everything from the roof and the foundation to the plumbing, right down to the switches on the wall. From their inspection, there will be a report that will include a lot more information that both the lender and the buyer will use. That will assess whether there is work to be done, whether there are things that need to be replaced, and whether the home itself will be the best place for the buyer to live. Sellers often dread inspectors because they’re the ones who find out what needs fixing and that often comes at a cost to the seller, whether in reducing the price or fixing the problem to close the sale. It’s a good idea for sellers to hire their own inspection before they put their property on the market, so they can learn about the potential issues before the buyer makes an offer and be proactive about it.
These two professionals have a very different, yet similar roles. They are very necessary in the acquisition of real estate and play an important role in the purchasing process. Having the right person for the job is also very important. Most of the time the bank or lending institution will choose the appraiser, but the buyer is the one who chooses the inspector. Remember, the appraiser deals with the valuation of the property and an inspector looks at the condition of the property. Both are an integral part of every real estate transaction, and it’s important for clients to know the difference—the more you know, the more your investment can grow. //skitownappraisal.com