How Home Appraisals and Inspections Affect Your Real Estate Deal

By Tammy Jerome

Tammy Jerome is an award-winning broker and host of “Selling Los Angeles” on the acclaimed American Dream TV show, with over two decades of experience and more than 1,500 successful transactions.

When you’re buying or selling a home, two steps often feel like boxes to check: the appraisal and the inspection. These steps can make or break your deal.

Why do appraisals matter? An appraisal tells the lender what the home is worth. It’s a safeguard so banks don’t lend more than a property’s value.

In today’s market, where home values have shifted and comparables lag, appraisals often come in lower than the contract price, especially in higher-end neighborhoods.

Take this year, for example: Zillow reported home values dropped by 3.2% year-over-year in March. Appraisers are factoring that into their reports, even when buyers are willing to pay more. When that happens, three things can happen:

• The buyer pays the difference out of pocket.
• The seller reduces the price.
• Both sides renegotiate to save the deal.

What I do is I submit a comprehensive list of comps and recent upgrades ahead of time. I’m proactive and collaborate with the appraiser. In certain cases, I also advise you to obtain a second opinion.

How do you protect your deal? For homebuyers, budget for potential repair costs, and lean on me, as your Realtor, to negotiate wisely post-inspection. Also, understand your loan type. FHA and VA loans have stricter property condition requirements.

For home sellers, keep records of upgrades because you’ll need them for the appraiser. Stay realistic about pricing since market value and contract price aren’t always the same. And be open to negotiations to keep the deal alive if an appraisal gap appears.

Appraisals and inspections are more than formalities. They’re milestones that can uncover problems and open doors for compromise. With preparation, transparency, and strategy, you can move through escrow with fewer surprises and more confidence.

If you need advice on how to prepare your home for a smooth inspection or are worried about an upcoming appraisal, call or send a message at (818) 903-5854 or tammyjerome@gmail.com. Let’s talk strategy before you list or write an offer.