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Home Inspection vs. Appraisal: Do You Know The Difference?

Jul 10, 2019

Whether you’re a buyer or a seller, you’ve likely heard the terms “home inspection” or “appraisal” thrown around.  When you buy or sell a home, they are simply part of the process.  Most often, people think that appraisals and home inspections are essentially the same thing; but there are some very distinct differences worth noting.

Understanding these differences is important, as an appraisal and a home inspection complete very separate tasks.

Once the home inspection order is placed, the inspector will visit the property to look for material defects.  He or she will look at all of the major home systems, which include but are not limited to:  roofing, flooring, windows, plumbing, electrical and HVAC.  If the inspector finds any defects, they will be noted in the home inspection report.  This report is provided to the homebuyer and is often used as a negotiation tool for home repairs prior to closing.

An appraisal determines the value of a property and its primary mission is to protect the homebuyer’s lender.  The lender relies on the appraiser’s general expertise and specific research in determining an opinion of value for the property.

Once a buyer has been pre-qualified for a home mortgage loan, their lender will order an appraisal from a certified appraiser.  The appraiser then visits the property to determine its value and condition.  To do so, he or she will measure the property, noting any remodeling as well as the health and safety condition of the property.  The property will be compared to other homes that have sold nearby.  All of this information will be documented in the appraiser’s report, which will be provided to both the lender and the homebuyer.

While an appraiser’s duty is to formulate an opinion of value for the lender, the home inspector’s duty is to educate the homebuyer about the condition of the property, including its components.  An inspection is ordered by the homebuyer to identify any material defects, as well as any potential future issues with the property.