Inspections vs. Appraisals vs. AVMs

Inspections

A property inspection (also known as J1) is ordered by the buyer and is meant to be an unbiased look at the condition of the property. A lender does not require it. A property inspector will examine the condition of the property inside and out and will check certain areas like the roof, electrical panels, wiring, plumbing, appliances, doors, and windows. The inspector does not do any repairs, he or she only makes notes and provides the buyer with a report. Based on the report findings, the buyer can choose the accept the property as-is, request credit/repairs to be done, or terminate the purchase contract. There are many inspectors in Oahu and they all charge different amounts based on square footage and property type. When it is time to select one, I will be glad to give you recommendations!

Appraisals

If you are applying for a mortgage, the lender orders the appraisal. The appraisal will consider comparable homes in the area as well as other factors such as lot size, nearby schools, and crime rates. The goal of the appraisal is to determine the true value of the property for the sake of the lender.

The key difference between an inspection and an appraisal is that an inspection aims to assess the physical condition of a home itself, while an appraisal solely determines the market value of the real estate.

AVMs 

An automated valuation model is a digital evaluation of the value of a home. An AVM will quickly research the database of similar homes in the area and compare them with the value of the subject property. For example, when you visit real estate websites such as Zillow, the suggested home value shown represents AVM value.  AVMs don't take into account the true condition of a property, or upgrades so it is always good to meet with a real estate professional to perform a thorough price analysis.