Do Home Inspections Really Affect Property Value?

Most Americans want to become homeowners one day, but buying a house is a major life decision. In fact, it’s very likely that buying a home will be the biggest purchase you’ll make in your lifetime.


As a buyer, you want to get a home inspection done on the property you are interested in. This inspection can uncover issues that will give you bargaining space regarding the closing price.


When you are selling your home, you should be aware of the inspection results as well. It’s better to disclose every sort of problem or damage in your home that you are aware of straight away. In doing so, Realty Management in Boise explains, the inspector’s results will have less power over the final price of your property.


In this article, we are going to explore this topic in-depth. You’ll learn about the interesting dynamic between home inspections, appraisals, and property values that is important to understand for buyers and sellers alike.


The Starting Point: What Is a Home Inspection?

Home inspections are carried out to see what the property’s current condition is. These are usually paid for by the buyer. When the buyer knows about any hidden damage or problem, they can make a more informed decision.


Still, there are sellers who pay for a home inspection before bringing their property into the market. This is because, should any issues arise, they can take care of these problems before someone comes to a property showing.


Here are some things on a typical home inspection checklist:


  • Is there excess moisture in high-risk areas such as crawl spaces or basements?
  • Is the plumbing in good working order? Are there any leaks?
  • What is the status of the home’s foundation? Is it possible to spot any signs of foundation issues?
  • How are the chimney and roof holding up?
  • Is the electrical work up to date?


Does a Home Inspection Affect Property Value?

The crucial point here is to understand the differences between property inspections and appraisals (or simply property valuations). Inspections come with the aim to ensure that there are good living conditions in a home. The goal of appraisals is determining the property value.


Home inspectors’ customers are home sellers or buyers, whereas appraisals are necessary for lenders. This is because property valuations are directly shaping the loan terms and the total amount lent.


When you are selling your home and the appraiser has set the home value lower than your selling price, buyers may ask you to decrease the sale price. Upon refusal, you could see most of the buyers walking away.


In this sense, an appraisal does affect the value of your home both in theory and in practice. But the same holds true for home inspections. The examination of your home can uncover serious flaws.


When a buyer learns about these flaws, they will feel that your property is worth less. After buying the home, they will need to conduct necessary repairs to restore the good conditions. This is going to be an expense that a buyer will pay out of his own pocket after acquiring your property.


Another question that sellers often ask is whether the home inspection will directly impact their property appraisal. In many cases, the appraiser does not have a copy of the home inspection report. Appraisers will usually not ask a copy if there isn’t one provided in the first place.


Inspection vs Appraisal: Which Affects Property Value More?

Appraisals have a much bigger role in affecting your property’s value because an appraisal is carried out to determine your home’s market value. This numeric value is something that buyers can directly use to negotiate your sale price.


Inspections affect the perceived value of your property by potential buyers. When they learn about considerable defects in your home’s structures, you’ll have to reflect these deficiencies in the closing price.

In a Nutshell: Home Inspections Affecting Property Value

Home inspections are an integral part of every transaction between buyers and sellers. Most of the time, buyers are the ones who order and pay for home inspections. Sometimes sellers do it before putting their properties up for sale in order to fix any issues noted by the inspector.


Property value is determined by an appraisal, not a home inspection. But when a home inspection uncovers serious flaws, the home’s value is affected from the buyer’s point of view. A home inspection usually doesn’t affect the property value determined by an appraiser.


We hope this guide offered you more clarity about home inspections and their relation to property value.


If you have any further questions, don’t hesitate to contact us today.

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