> ## Documentation Index > Fetch the complete documentation index at: https://learn.hometrics.ai/llms.txt > Use this file to discover all available pages before exploring further. # Due Diligence > Inspections and appraisals that protect you before you commit Due diligence is the investigation period after your offer is accepted. This is when you verify the property's condition and value before fully committing. Two evaluations happen during this phase: the home inspection (your protection) and the appraisal (the lender's protection). ## Inspection vs Appraisal These are different evaluations serving different purposes. | | Home Inspection | Appraisal | | -------------- | ---------------------------- | ------------------------ | | **Purpose** | Assess condition | Determine value | | **Who orders** | Buyer | Lender | | **Who pays** | Buyer | Buyer | | **Required** | No (but standard) | Yes (for mortgage) | | **Focus** | Defects and safety | Market value | | **Timeline** | 7-14 days after contract | 7-14 days after contract | | **Report use** | Negotiation, decision-making | Loan approval | Both happen during roughly the same timeframe, but they serve completely different functions. ## Home Inspection The home inspection evaluates the property's physical condition. An inspector examines accessible areas and systems, documenting defects, safety concerns, and maintenance issues. Complete guide to what inspectors do and their limitations ### What Inspectors Evaluate Foundation walls, floor framing, support beams, signs of settling or movement, structural integrity. Roof covering condition, flashing, gutters, siding, windows, doors, grading and drainage around the foundation. Service panel, wiring type and condition, outlets, switches, GFCI protection, safety concerns. Water supply lines, drain lines, water heater, fixtures, water pressure, visible leaks. Heating and cooling systems, ductwork, filters, thermostat operation, age and condition. Walls, ceilings, floors, stairs, railings, windows, doors, built-in appliances. Attic insulation, vapor barriers, ventilation in attic and crawl spaces. Home inspections are visual examinations of accessible areas. Inspectors cannot see through walls, identify hidden defects, or predict future problems. They report what is visible on inspection day. ### Specialty Inspections General inspections don't cover everything. Depending on the property, you may need additional [specialty inspections](/service-categories/home-inspectors/types-of-inspections). Tests for radioactive gas that can accumulate in basements. Common in many regions. Mitigation is straightforward if levels are high. Identifies wood-destroying insects and damage. Often required by lenders. May be performed by general inspector or separate specialist. Camera inspection of sewer line from house to street. Identifies breaks, root intrusion, bellies, or deterioration. Repairs can cost thousands. If moisture issues are suspected or visible. Identifies mold presence and extent. May require remediation before closing. For homes with fireplaces. Evaluates flue condition, liner, cap, and structural integrity. For properties not on municipal water/sewer. Tests water quality and evaluates septic system function. Often required by lenders. Evaluates equipment, surfaces, safety features, and structural condition of pools or spas. ### Scheduling and Timing Schedule your inspection immediately after your offer is accepted. Don't wait. **Why timing matters:** * Inspection [contingency](/service-categories/legal/contracts-and-agreements/addendums-and-contingencies) is typically 7-14 days * Inspectors may not have immediate availability * You need time to review the report * You need time to negotiate if issues are found * Specialty inspections take additional time Waiting until day 10 of a 14-day contingency leaves almost no time to respond to findings. Questions to ask and how to evaluate your options ### What Happens After Inspection The inspection report documents findings. You then decide how to proceed. Proceed without requesting changes. Appropriate when issues are minor or already reflected in price. Ask seller to fix specific issues before closing. Common for safety issues, major system problems, and code violations. Ask for price reduction or closing cost credit instead of repairs. Gives you control over how and when repairs are made. Cancel the contract and receive [earnest money](/service-categories/title-escrow/earnest-money) back. Appropriate when issues are too significant or seller won't negotiate. **Seller responses to requests:** * Agree to all requests * Agree to some, decline others * Offer credit instead of repairs * Refuse all requests If the seller refuses to address significant issues, you must decide whether to proceed as-is or terminate under your contingency. Detailed guide to negotiating repairs and credits Walking away is sometimes the right decision. The inspection contingency exists to protect you from unacceptable conditions. Don't let emotional attachment push you into a bad purchase. ### What to Negotiate Focus negotiation on significant issues, not cosmetic concerns. **Typically negotiated:** * Safety hazards (electrical, structural, health) * Major system problems (HVAC, plumbing, roof) * Code violations * Deferred maintenance with significant cost * Issues affecting insurability or financing **Typically not negotiated:** * Cosmetic issues * Normal wear and tear * Minor maintenance items * Personal preferences What inspectors frequently discover and typical repair costs ## Appraisal The appraisal determines the property's market value for the lender. This protects the lender by confirming the property is worth at least as much as the loan amount. Understanding the appraisal process and what appraisers do ### How Appraisals Work The lender orders the appraisal and selects the appraiser. You cannot choose your own appraiser for a mortgage transaction. Appraisers visit the property, measure and photograph it, note its condition and features, then research [comparable sales](/service-categories/appraisers/the-appraisal-process) to determine market value. Typically 7-14 days from order to completed report. Scheduling, inspection, research, and report preparation all take time. You pay for the appraisal as part of your loan costs. Typically 400-700 for standard residential properties. ### When the Appraisal Comes in Low If the appraisal is lower than the purchase price, there's a gap between what you agreed to pay and what the lender will finance. **Example:** * Purchase price: 400,000 * Appraisal value: 380,000 * Gap: 20,000 The lender will only base your loan on the appraised value. You must address the 20,000 difference. Ask the seller to reduce the price to match appraised value. Sellers may agree to avoid losing the deal. Bring additional funds to cover the gap. Requires available cash beyond your original down payment. Negotiate with seller to meet somewhere in the middle. You bring some additional cash, seller reduces price. Request reconsideration of value with additional comparable sales data. Not always successful. If you have an appraisal contingency and cannot reach agreement, you can terminate and receive earnest money back. Options when value comes in below expectations If you waived the appraisal contingency, you must cover any gap with cash or lose your earnest money. This is why waiving appraisal contingency requires significant cash reserves. ## Preparing for Due Diligence Before your offer is accepted, have these ready: **Inspector identified** * Research and select an inspector in advance * Confirm availability and scheduling process * Know which specialty inspections you might need **Understand your contingencies** * Know your inspection contingency deadline * Know your [financing contingency](/service-categories/mortgage-lenders/mortgage-timeline) deadline * Track dates from day one **Communicate with your lender** * Provide signed contract immediately * Respond quickly to documentation requests * Appraisal is ordered after contract is received **Cash reserves confirmed** * Know how much you have available * Prepare for possible appraisal gap * Budget for inspection costs *** ## Learn More Understanding what inspectors do and their limitations General and specialty inspections explained Reading reports and interpreting findings Questions to ask and evaluation criteria Understanding the appraisal process Step-by-step breakdown of how appraisals work Reading and interpreting appraisal reports Options when value comes in below expectations *** The final steps before you own the property