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HOME INSPECTION VS. APPRAISAL: WHAT'S THE DIFFERENCE?

These two terms get mixed up constantly, but a home inspection and an appraisal answer completely different questions.

Purpose

Home inspection: answers "what condition is this home in, and what needs attention?" Appraisal: answers "what is this home worth?"

Who Orders It

Home inspection: typically ordered by the buyer during due diligence. Appraisal: ordered by the lender to protect their investment in the loan.

Who Performs It

Home inspection: a licensed home inspector. Appraisal: a licensed real estate appraiser — a different profession with different training entirely.

What's Evaluated

Home inspection: the condition and function of the roof, structure, electrical, plumbing, HVAC, and interior — see a sample report for the level of detail involved. Appraisal: comparable sales, square footage, lot size, and general condition, used to calculate market value.

Is It Required?

Home inspection: optional, but strongly recommended for buyers. Appraisal: typically required by the lender on any financed purchase.

Bottom Line

An appraisal protects the lender's investment. A home inspection protects yours. Skipping the inspection because "the appraisal already happened" is one of the most common — and costly — misunderstandings in home buying.

Don't skip the inspection.

An appraisal tells you what the home is worth. An inspection tells you what you're actually buying.

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