What’s the Difference Between a Home Inspection and an Appraisal?

If you’re planning to buy a home, an inspection is an important step in the process.

It assesses the condition of the home before you finalize the transaction. It’s also a different step in the process from an appraisal, which is a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. Here’s the breakdown of each one and why they’re both important when buying a home.

Home Inspection

Here’s the key difference between an inspection and an appraisal. Bankrate says:

“In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.”

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.

Home Appraisal

The National Association of Realtors (NAR) explains:

“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”

When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.

This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.

However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.

Bottom Line

The inspection and the appraisal are critical steps when buying a home, and you don’t need to manage them by yourself. Work with a real estate professional today so you have the expert guidance you need to navigate the entire homebuying process.

Keep reading.

Related Links

• Ultimate Guide To Choosing the Right Hardwood Flooring for Your Home

• Got a tax refund? 6 Home Improvements Will Level Up Your Living (and Help Sell Your House)

• The Three Factors Affecting Home Affordability Today

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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This Weekend: Colorado Open Houses for April 28th to 30th

Our agents are hosting Open Houses this weekend all over the Colorado Area.

You can find all of these listings on our website. Please reach out to the listing agent for information on times and more information on the listing! For current open house times, check out the Open House page.

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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The Three Factors Affecting Home Affordability Today

There’s been a lot of focus on higher mortgage rates and how they’re creating affordability challenges for today’s homebuyers.

It’s true that rates climbed dramatically since the record-low we saw during the pandemic. But home affordability is based on more than just mortgage rates – it’s determined by a combination of mortgage rates, home prices, and wages.

Considering how each one of these factors is changing gives you the full picture of home affordability today. Here’s the latest.

1. Mortgage Rates

While mortgage rates are higher than they were a year ago, they’ve hovered primarily between 6% and 7% for nearly eight months now (see graph below):

As the graph shows, mortgage rates have experienced some volatility during that time. And even a small change in mortgage rates impacts your purchasing power. That’s why it’s so important to lean on your team of real estate professionals for expert advice to stay up to date on what’s happening in the market. While it’s hard to project where mortgage rates will go from here, many experts agree they’ll likely continue to remain around 6%-7% in the immediate future. 

2. Home Prices

Over the past few years, home prices appreciated rapidly as the record-low mortgage rates we saw during the pandemic led to a surge in buyer demand. The heightened buyer demand happened while the supply of homes for sale was at record lows, and that imbalance put upward pressure on home prices. However, today’s higher mortgage rates have slowed down price appreciation.

And, the truth is, home price appreciation varies by market. Some areas are seeing slight declines while others have prices that are climbing. As Selma Hepp, Chief Economist at CoreLogic, explains:

“The divergence in home price changes across the U.S. reflects a tale of two housing markets. Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply. The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns and relative affordability due to new home construction.”

To find out what’s happening with prices in your local market, reach out to a trusted real estate agent.

3. Wages

The most positive factor in affordability right now is rising income. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time: 

Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage since you don’t have to put as much of your paycheck toward your monthly housing cost.

Home affordability comes down to a combination of rates, prices, and wages. If you have questions or want to learn more, reach out to a real estate professional who can explain what’s happening locally and how these factors work together.

Bottom Line

If you’re planning to buy a home, knowing the key factors that impact affordability is important so you can make an informed decision. To stay up to date on the latest on each, connect with a trusted real estate professional today.

Get more on Keeping Current Matters.

Related Links

• Ultimate Guide To Choosing the Right Hardwood Flooring for Your Home

• Got a tax refund? 6 Home Improvements Will Level Up Your Living (and Help Sell Your House)

• 5 Reasons Millennials Are Buying Homes

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Got a tax refund? 6 Home Improvements Will Level Up Your Living (and Help Sell Your House)

Let’s all put down the calculators, file the receipts, and celebrate the fact that tax season is over!

For many of us, that means a nice refund check has already landed or is on its way. (Fun fact: The IRS issued 237.8 million refunds in 2022.)

If you’re in the refund crowd, you might wonder what to do with that shiny sum. While you could blow it on a bunch of stuff that ends up in next year’s spring-cleaning piles, we’re proposing something a bit more lasting.

We asked designers and real estate agents for advice on the best home improvement projects to tackle with your tax return money. Here are their Top 6 picks for ways to reinvest those funds into your home for a more functional, comfortable, and ready-to-sell space.

1. Upgrade old appliances

Appliances from a few decades ago are unattractive and can actually be the secret energy vampires elevating your monthly bills. (And worn appliances are a massive turnoff for future buyers.)

“Upgrading old appliances is usually something that has to be done with borrowed money, which means that any time you can pay cash, you’re going to be saving,” says Martin Orefice, the CEO of Rent To Own Labs.

Additionally, new appliances are way more efficient at cooking, refrigerating, and cleaning, so you’re looking at a truly valuable improvement project.

2. Update your kitchen

Much like upgrading appliances, updating your out-of-date kitchen can be a surprisingly lucrative investment to make with your tax-return dollars.

And while you could spend thousands changing every part of your kitchen, Megan Nelson, of Nest with the Nelsons, reminds us that you don’t have to go full monty to make a big difference.

“Manageable kitchen updates are a wonderful way to use your tax refund,” says Nelson. “Think smaller improvements like new paint, an updated pantry door, new large-scale lighting over the island, or a dramatic light fixture over your table.”

. Splurge on a new mattress

A brand new, comfy mattress might not add much monetary value to your home, but the personal value of a great rest is priceless.

“A good night’s sleep is essential for overall wellbeing,” says designer and real estate agent Cam Dowski, of We Buy Houses Chicago. “Investing in a high-quality mattress can improve sleep quality, leading to better health and productivity.”

4. Invest in your outdoor space

Whether you need a new grill or want to revamp those worn-down garden beds, investing in your home’s outdoor living space will bring you lots of joy as we head into the warmer months. And it might even boost your home’s overall curb appeal when you’re ready to sell.

“Some outdoor decisions can really customize your space and make it more inviting,” says real estate agent Lauren Byington, of WarrenandLauren. “Adding landscaping, new furniture, and outdoor toys, like hot tubs, can make your space perfect for you and set a relaxing tone.”

Another pro tip? Extend the use of your outdoor area by investing in a fire pit to use in the spring and fall.

5. Make your home smarter

No, we aren’t proposing you send your house to college. But you can make your home smarter by adding in some of the latest gadgets with control capabilities for your abode’s security, heating and cooling, and electric systems.

“Making your home smarter with modernized security and smart devices can help bolster your home’s modernity,” says Byington.

Plus, who doesn’t love shouting grocery-list items to their kitchen smart device while cooking?

6. Modernize the details

If you recently purchased an older home, you might have noticed some of its characteristics haven’t aged well with the times.

A few outdated biggies are texturized, popcorn ceilings and spindly stair rails.

“Old ceilings and dated stair rails are a major turnoff,” says Byington. “Consider having them updated to a more contemporary look. Go for nontextured or wood-clad ceilings and a modern-looking stairway with simple lines.”

Updating small details in your home will not only increase the personal enjoyment and aesthetic of your home, but these upgrades could also entice future, potential buyers.

Get more like this on Realtor.com

Related Links

• Ultimate Guide To Choosing the Right Hardwood Flooring for Your Home

• Record apartment supply is good for mortgage rates

• 5 Reasons Millennials Are Buying Homes

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Should You Dispute Your Property Tax Assessment?

by West + Main agent Janell Arant

The Good, the Bad, the Ugly...

In the last several years, Colorado homeowners have seen the good, the bad, and the ugly of what comes with an absurdly imbalanced seller’s market resulting from a high demand for housing with not enough inventory.

The good? We all love that part– unprecedented home equity gains, of course! The bad? Bidding wars made for either discouraged, maybe-next-year, buyers or new homeowners left feeling like they paid more than they should have but had no choice. The ugly? Well, let me tell you about the perfect storm...

Bomb Cyclone PTSD...

Picture a typical spring storm in Colorado – a little wind, a little rain turning to giant snowflakes that melt the next day, right? Maybe a few broken branches, but people are outside walking their dog and getting on with their day. Then, picture the bomb cyclone spring storm we had a few years back. It was a culmination of extreme weather conditions all joining forces, never seen before in one storm. Records were broken, businesses and schools shut down, and thousands were left stranded.

Reporting live from your mailbox...

Now picture your 2023/24 property taxes as that bomb cyclone (yes, it’s a stretch, but stay with me). In this scenario, the County Assessor’s office is the weather reporter, simply gathering the data and delivering the report to you, good or bad.

What exactly is the Assessor’s office? To keep it simple, the appraisers working for the county Assessor’s office, by law, gather sales data occurring during a select period of time, to value homes equitably so property taxes can be collected by the County Treasurer to pay for public services such as schools, roads, water, sewer, libraries, and public safety! All the things we need to run our cities well.

On May 1st the news of that that bomb cyclone is hitting homeowner’s mailboxes in the form of a little postcard known as your NOV (Notice of Value) sent by the Assessor’s office. Essentially, it’s the weather report based on the data they found, and this time it’s ugly!

The Makings of the Perfect Storm...

Just like the volatile conditions that have to come together to create the perfect storm, Colorado’s property tax conditions have all come together in the worst possible way, wreaking havoc to home owners across the state...and it all started brewing a few years ago:

- The repeal of Colorado’s Gallagher Amendment in 2020
- Rising home values at unforeseen rates between 2020 and 2022
- Peak values occurred April-June 2022** (keep this date in mind)
- Interest rates rising sharply in the summer of 2022
- The housing market cooling down because of interest rates

...add in our long-standing Colorado statutes:

- Every odd year, homes are reappraised by the county Assessor’s Office - 2023
- Residential properties are valued with the market approach, using sales occurring during the pre-designated study period
- The study period for this reappraisal = July 1, 2020 – June 30, 2022**
- All sales occurring in the study period must be time trended as if they sold on
June 30, 2022**

What does this mean for homeowners?

Essentially, it comes down to this: While unprecedented housing market conditions were great for earning equity, homeowners are now going to be paying for it in their property taxes. Without the Gallagher Amendment, which mostly benefited densely populated residential areas by keeping property taxes balanced, the protective shield is gone.

Homeowners are going to feel the pinch starting January 2024 when the increased property taxes kick in, but by how much? Denver County Assessor, Keith Erffmeyer, states, “Denver’s median increase for single family homes is 36% for this reappraisal, and even higher for mountain areas like Crested Butte.”

Tom Kammer, analyst for Douglas County’s Assessor’s office, reported an average increase of 49% for Douglas County homeowners! It’s like nothing either have seen before. Kammer warns the biggest misconception by homeowners, that may spark unnecessary property tax appeals, will be the discrepancy they see between the June 30, 2022 appraisal date value on their NOV and their home’s current value as seen on popular public websites like Zillow. He states, “The NOV is going to look high because it was when values were at it’s peak.”

Since spiking interest rates have demanded for a cooling in the housing market, the “Zestimate” homeowners see may not match up. He recommends if homeowners are using sites like Zillow, to use the Zestimate History sliding timeline graph or table view, which can both be found on the desktop version, which will show what the property’s value was as of June 2022.

County Assessors, like Erffmeyer, are working hard to educate homeowners as well as stay in front of Legislation to deliver the message that homeowners will need relief. Legislation has been presented with recent bills to help provide relief, but none have been adopted as of yet.

Next steps for homeowners...

1) Educate yourself on the home valuation process, visit your County Assessor website
2) Property tax appeal season begins May 1st and runs through June 8th, however please check your county’s policies and deadlines as they may differ.

Protesting your property value is every tax payer’s right and is easily exercised online, in person, or by mail (see your NOV for instructions).

However, as a former Douglas County residential appraiser, I recommend that you follow these guidelines when protesting:
- Have a good reason to protest
- Know your value could increase if big-ticket items are found missing
- Provide comparables in your neighborhood that look like yours of same style (don’t mix Ranch-style homes with 2-story’s, for example.): similar size, similar lot properties, similar quality.
- Only use comparables that have sold in the study period (July 1, 2020 – June 30th, 2022)
- The closer the sale is to the appraisal date of June 30, 2022, the better
3) Reach out to your Legislators
4) Talk to your trusted Realtor® for guidance, they know the market better than anyone and are here to answer all of your real estate related questions.

Look on the bright side...

To end on a positive note, Colorado has some of the lowest property taxes in the entire nation – yes, even with the bomb cyclone style conundrum we’re in! Plus, Colorado is just simply amazing to live in!