What’s the Difference Between an Inspection and an Appraisal?

A home appraisal and home inspection are both important services before signing the final agreement, explains Remax Infinity PM. But it’s a common misconception that these are essentially the same thing. There are crucial differences between an appraisal and a home inspection.

Are you selling your home? Or looking to buy one?

A home appraisal and home inspection are both important services before signing the final agreement, explains Remax Infinity PM. But it’s a common misconception that these are essentially the same thing. There are crucial differences between an appraisal and a home inspection.

In the following article, you’ll learn about the major differences between an appraisal and a home inspection.

What’s the purpose of a home appraisal?

Appraisers seek to protect the lender. They check the home before the lender approves a buyer’s loan. By doing this, they ensure that the lenders are able to dodge any overpriced properties.

Appraisals provide vital information for buyers and sellers as well. Here are some of the factors taken into consideration by the appraiser:

• Size and condition of the property
• Location
• Lot size
• Unique amenities
• Market conditions and opportunities
• Recent sales data from similar homes
• Proximity to services and education

All the involved parties receive a comprehensive report. The data shows the home’s value and all the associated calculations. The lender takes this information into account to determine:

• The type of loan
• The amount of down payment
• The interest rates

In the majority of the cases, the buyer pays for the appraisal procedure. The average fees are around $300 to $400. This expense is added to the closing costs.

How do real estate appraisals and bank appraisals differ?

These terms tend to create confusion. Generally, people use the term “real estate appraisal”. However, a very similar procedure is called ” bank appraisal” in the banking industry.

In most cases, the appraisers look at the same thing. However, a bank appraisal could come with a narrower focus on the fair market value. And there might be further interest in comparisons for resale purposes.

What’s a home inspection?

Home inspectors check the property for its overall condition, integrity, and functionality. Usually, buyers pay for the home inspection. It’s in their interests because the inspection will uncover any hidden issues and damage.

Some sellers hire a home inspector as well. They want to find problems before putting their homes on the housing market. Then it’s possible to fix these issues before property showings.

The home inspector checks all the main areas of a given property. This includes the screening for:

• Roof and chimney issues
• Plumbing problems
• The safety and operating state of appliances
• Excess moisture in the attic, crawl space and/or basement
• Foundation issues and structural integrity
• The good condition of sinks, toilets, and tubs
• Water damage and mold growth

What are the major differences?

Home appraisals focus on home value. But home inspections are carried out to determine the overall conditions of the home. Here are the main differences in these procedures:

• Appraisers use their own eyes and rarely rely on additional devices. Home inspectors use special tools and use their training together with experience to uncover hidden flaws.
• Lenders require home appraisals, but not home inspections.
• Your lender organizes the appraisal for you. But ordering an inspection is the responsibility of the buyer or seller.
• Homebuyers are encouraged to walk through the property with the inspector. Appraisers, on the other hand, tend to work alone.
• Home inspectors explain the issues on the spot. Appraisers wait until finalizing the report before they communicate any details about what they found.
• Home appraisal considers the big picture surrounding the property, including the lot size and crime rates. Home inspectors focus only on the property as a separate unit.

• Home inspection won’t affect your loan amount and terms. But an appraisal will change the terms because that’s the aim of this service.

How to pick a good home inspector?

Do some research before choosing a home inspector. There’s a difference between the qualified inspectors and people without training and experience.

• Ask for recommendations from your friends and real estate agents
• Research potential candidates
• Ask for references
• Double-check their certifications and insurance
• Read their online reviews
• Ensure there’s no conflict of interest, i.e. they aren’t also conducting or own repair services

The bottom line: The difference between an inspection and an appraisal

Appraisal home assessment can’t be used in place of an inspection. These procedures serve different needs and aren’t competing against each other.

Home inspectors make sure the home is structurally and functionally sound. Appraisers determine the value of the home. Both services are essential steps when selling and buying a home.