15 Steps to Homeownership: 10

Step 10 – The Appraisal and Inspection

Course Title: The Power of Ownership™: Easy Steps to Smart Homebuying

1. COURSE OVERVIEW

Step 10 of The Power of Ownership™ deals with two of the most essential safeguards in the homebuying process: the appraisal and the inspection. While making an offer is an emotional milestone, the appraisal and inspection are your reality check. These professional evaluations confirm whether the property is worth the price—and if it’s worth the risk.

This module helps participants understand the purpose, process, and power of both the appraisal and the inspection. It demystifies what inspectors and appraisers actually do, outlines what buyers should look for, and explains how to negotiate results. Participants will also learn how to handle low appraisals, serious repair issues, and whether to walk away or renegotiate.

This step empowers buyers to move forward with clarity and confidence, knowing they are not just buying beauty—but soundness, safety, and value.

1. LEARNING OBJECTIVES

By the end of this module, participants will:

• Understand what an appraisal is and why lenders require it
• Learn the key components of a home inspection
• Know how to interpret both reports and ask follow-up questions
• Identify serious red flags that may affect value or safety
• Learn how to renegotiate or request repairs based on findings
• Know when to walk away versus when to move forward

III. SCRIPTURAL FOUNDATION

Proverbs 14:15 (NIV) – “The simple believe anything, but the prudent give thought to their steps.”

The appraisal and inspection are how the prudent protect their investment. These steps are not optional—they are biblical wisdom in action. Just because a home looks good doesn’t mean it’s good. Discernment requires verification.

1. INSPIRATIONAL QUOTE

“Before you lay the foundation of your dreams, make sure the ground beneath it is solid.” — Coach Greb

1. WHAT IS AN APPRAISAL?

An appraisal is an unbiased professional opinion of a home’s value. It’s conducted by a licensed appraiser and is typically required by your lender to ensure the home is worth the amount you’ve agreed to pay.

Key Aspects of an Appraisal:

• Compares your home to 3–6 similar homes recently sold nearby (called “comps”)
• Evaluates the condition, location, size, upgrades, and market trends
• Determines the market value—what the home would reasonably sell for

Why It Matters:

• If the home appraises below your offer price, the lender may reduce the loan amount
• You may need to renegotiate or make up the difference in cash

Timeline: Appraisals typically occur 7–10 days after the offer is accepted

1. DEALING WITH A LOW APPRAISAL

If your appraisal comes in below your purchase offer, you have a few options:

1. Renegotiate the Price: Ask the seller to lower the price to match the appraisal
2. Pay the Difference: Bring additional cash to the closing table
3. Dispute the Appraisal: Provide new comps or correct factual errors
4. Walk Away: If protected by an appraisal contingency, you can exit the deal

Example:

• Offer Price: $320,000
• Appraisal: $305,000
• You negotiate seller to lower to $312,000 and pay $7,000 difference in cash

VII. WHAT IS A HOME INSPECTION?

Unlike the appraisal, the inspection is a deep dive into the condition of the property. It is not required by the lender but is essential for your protection.

What Inspectors Evaluate:

• Roof, foundation, plumbing, electrical, HVAC
• Windows, doors, appliances, ventilation
• Mold, pests, safety hazards, water damage
• Attic, insulation, crawl spaces, and structure

Inspection Cost: $350–$600 on average, paid by the buyer

Inspection Timeframe: Within 5–10 days of offer acceptance

Length: 2–4 hours depending on property size

VIII. RED FLAGS VS. FIXABLE ISSUES

Major Red Flags (May Be Deal Breakers):

• Foundation cracks or shifting
• Roof near end of life
• Water penetration or mold
• Faulty electrical panels or fire hazards
• Active termite infestation
• Asbestos, lead paint, or outdated plumbing

Fixable or Negotiable Issues:

• Minor plumbing leaks
• Loose outlets or fixtures
• Worn carpet or paint
• Broken appliances (if included)

Always prioritize health, safety, and structural integrity. Cosmetic issues can be improved later.

1. RESPONDING TO THE INSPECTION REPORT

Once you receive your report:

1. Review it with your realtor
2. Highlight safety issues or large-ticket repairs
3. Decide whether to:
   • Request repairs
   • Ask for seller credits
   • Renegotiate the price
   • Proceed as-is
   • Cancel the contract (if within contingency period)

Negotiation Tip: Focus on essential issues, not aesthetics. Sellers are more likely to respond favorably to reasonable, safety-based requests.

1. OPTIONAL INSPECTIONS

Beyond the standard home inspection, consider:

• Termite Inspection
• Radon Test
• Sewer Scope (for older homes)
• Chimney Inspection
• Structural Engineer Review

Ask your realtor which are appropriate for your home type, region, and age.

1. CASE STUDY: The Nguyens Choose Peace Over Pressure

The Nguyens were under contract on a lovely 4-bedroom home in a quiet neighborhood. The appraisal came in right on target. However, the inspection revealed roof damage, an outdated electrical panel, and foundation cracks.

The seller offered a $2,000 credit, but the repair estimates were over $18,000. After prayer and family discussion, the Nguyens chose to walk away. Two weeks later, they found another home in better condition—with a newer roof, safe systems, and peace of mind.

Lesson: Just because it feels right doesn’t mean it’s right. Peace is part of the price.

XII. DO’S AND DON’TS

✅ DO:

• Attend the inspection if possible
• Take photos and ask questions on site
• Request a full written report with images
• Get quotes for repairs before finalizing negotiations

❌ DON’T:

• Ignore serious warnings
• Assume the seller will fix everything
• Let minor flaws derail a great deal
• Proceed without reviewing the appraisal value

XIII. PRACTICE EXERCISES

1. Sample Appraisal Summary Review

• Read a sample report
• Highlight value-adding features (upgrades, comps, location)
• Note discrepancies that could affect value

2. Home Inspection Walkthrough Worksheet

3. Negotiation Practice Roleplay

• One partner plays the buyer
• One plays the seller’s agent
• Use sample reports to negotiate credits or repairs

4. Faith Reflection Prompt

• Am I listening for peace or just pushing for progress?
• What does wise stewardship look like at this stage?
• Am I honoring God by protecting my future home?

XIV. TEACHER’S MANUAL SNAPSHOT

Goals:

• Teach learners to value verification over excitement
• Equip them to read and respond to professional reports
• Build confidence to walk away when red flags arise

Tools:

• Sample inspection and appraisal reports
• Repair cost estimation sheets
• Local contractor quote directories

Activities:

• Small group: red flag or fixable issue quiz
• Negotiation simulation
• Case study reflections

1. PARTICIPANT GUIDE SUMMARY

Includes:

• Appraisal vs. Inspection comparison chart
• Report interpretation checklist
• Repair prioritization guide
• Buyer repair/renegotiation worksheet

Weekly Assignments:

• Watch a video of an actual inspection tour
• Interview a local inspector about most common issues
• Create your own peace plan: what will I walk away from?

XVI. CONCLUSION

Appraisals protect your investment. Inspections protect your peace. Both are necessary. As a buyer, your job isn’t just to fall in love with a home—it’s to confirm that it can love you back. And that requires looking beneath the surface.

Scripture Reminder: “The prudent see danger and take refuge, but the simple keep going and pay the penalty.” — Proverbs 22:3

Wisdom is not fear—it’s foresight. Let your purchase be grounded in both passion and prudence.

Vivamus varius vitae dolor ac hendrerit. Vestibulum nec dolor ac nunc blandit aliquam. Nam at metus non ligula egestas varius ac sed mauris. Fusce at mi metus. Nam elementum dui id nulla bibendum elementum.

1. Lorem ipsum dolor sit amet, consectetuer adipiscing elit.
2. Aliquam tincidunt mauris eu risus.
   1. Lorem ipsum dolor sit amet, consectetuer adipiscing elit.
   2. Aliquam tincidunt mauris eu risus.
   3. Vestibulum auctor dapibus neque.
3. Vestibulum auctor dapibus neque.

Proin sagittis dolor sed mi elementum pretium. Donec et justo ante. Vivamus egestas sodales est, eu rhoncus urna semper eu. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Integer tristique elit lobortis purus bibendum, quis dictum metus mattis. Phasellus posuere felis sed eros porttitor mattis. Curabitur massa magna, tempor in blandit id, porta in ligula. Aliquam laoreet nisl massa, at interdum mauris sollicitudin et.