Quebec Mortgages

Appraisals and Inspections

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When you are buying a home you will want to know two things, if you are paying the right price, and if the condition of the home is as promised. To determine the value of the home you may need a professional appraisal. If you are taking out a mortgage loan the lender usually requires a professional third party appraisal of the home to determine the lending value.

Appraisal

A real estate appraisal is quite different from a property inspection, although they do overlap in their scope and procedure. A real estate appraisers job is to determine the value of the property. Usually the appraiser is estimating the market value of the land and building for mortgage lending purposes. Often the scope of the appraisal does not include a detailed property inspection, in many cases an estimate of the value can be reached without a comprehensive inspection of a residential property, particularly if most of the value is in the land and not the building. For mortgage lending purposes the financial institution may only require a determination that the property is sufficient security for the mortgage. Mortgage lenders are also concerned that the condition of the property is such that costly expenditures on repairs or renovations will not cause an unmanageable financial drain on the borrower. Home buyers are increasingly turning to property inspectors to insure that the home not only represents good value for the purchase price but is also in good shape.

Inspection
The home inspector offers no opinion on the value of the property. Their function is to inspect the adequacy and condition of the building and all major systems. A home may be of sufficient "appraised" value to get the mortgage, but a closer look at the building and systems may reveal that costly repairs are on the horizon. Your inspection will point out any red flags and areas of concern. Many inspectors will supply you with a schedule outlining the estimated cost to remedy or repair the problems noted. In addition most inspections will estimate the timing of any suggested repairs and prioritize the seriousness of any adverse findings. Armed with this information the purchaser can then make an informed decision on whether or not to proceed with a purchase offer.

It is important to hire a qualified and experienced home inspector. In Canada the home inspection industry is, for the most part, self regulated by a number of trade organizations. Contact one of these organizations to refer you to a home inspector.

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