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Is a Home Inspection the Same as an Appraisal?

What you'll learn: Understand the importance of both an appraisal and a home inspection


Picture this. You’ve found a home, and you’re going to put in an offer. It’s all very exciting. But prepare yourself — once the seller accepts your offer — the inspections begin. And they’re under tight timelines. Most home shoppers wonder: Is a home inspection the same as an appraisal? In this article, you’ll learn what is a home inspection; and what is an appraisal? And do you need both?

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Which comes first, an inspection or an appraisal?

You should have both before purchasing a home. However, we recommend having an inspection first. That way, if the inspection comes back unfavorable, there’s no need to pay for an appraisal. Especially since you might not have any interest after seeing the inspection results.

As a potential buyer, you’ll quickly be able to determine if you want to pursue a purchase after the inspection. It will provide a detailed report of all the essential parts like plumbing, electrical, and roof — to name just a few.

How much does an inspection cost?

  • An inspection varies based on several factors and is approximately around $400-700, but may be well over $1000 in some cases.

How much does an appraisal cost?

  • The cost of an appraisal will generally be around $400-600. Larger luxury homes and estates will cost more. Plus, they may require more than one appraisal.

What is a home inspection?

A home inspection assesses the physical integrity of a home — in a thorough but non-evasive manner. Inspections will test to see if things are functioning correctly and are of good quality.

Why should a buyer get an inspection?

Home inspections give buyers a good idea of future upkeep and potential renovations. It’s vital to have that data before purchasing a home. If the inspection comes back favorable, buyers will likely want to take the next steps. But what if the inspection comes back unfavorable? The buyers will have to decide if the damages are worth their time and money.

Buyers can also choose to renegotiate the price depending on the amount of work that may be needed.  Plus, they’ll need to negotiate who pays for the work — buyer or seller.

Why should sellers get an inspection?

An inspection will show the seller what they should fix before putting their house on the market.  Having an inspection, and repairing the most important items, will attract more buyers. The fewer things on the list needing repairs, the more attractive the home becomes to shoppers.

What do inspectors look for?

  • Termites. Check for evidence of any termite related damage
  • Plumbing. Check for leaks or damage in all plumbing systems inside and outside, testing the working parts of all faucets, spigots, toilets, and tubs
  • Electrical. Locate any outlets, panels, light switches, light fixtures, any wiring — check to make sure everything is functioning properly and is up to code.
  • Roof. Look for any faulty shingles, cracks, moss growth, gutter issues, and damaged or missing chimney cap.
  • Flooring. Look for any cupping, abnormal sounds, cracking, and other deterioration.
  • Windows. Look for any staining on glass or damage to frames, screens, or panes, air leakage, fogging, non-functioning, or missing parts.
  • Doors. Examine all doors, including the garage, for frame damage, visual damage, and overall functionality
  • Water heater. Check for any unusual sounds, abnormal smells, corrosion, gas leaks, blackened areas near the burner, piping, back-drafting, wiring, ensuring everything is up to code, and the expected lifespan.
  • Appliances. Inspect all built-in appliances for proper operation and longevity
  • Walls. Look for any surface damage, dampness, structural damage, and anything harmful in the crawlspace.
  • Foundation. Check for cracks, settling, or damage in the interior or exterior perimeters and foundation supports.
  • HVAC (heating, ventilation, and air conditioning). Examine the thermostat, air conditioner, heat pump, furnace, and ducts for damage and proper function.

The final report will showcase any defects or poor conditions found during the inspection, including photos and possibly graphs. This process is extensive.

After receiving the report, you can assess the damages/issues with the home. Then determine the amount of money it will cost for repairs and renovations. Next, consider any future complications which may arise. Finally, decide if the home is worth it for you and fits your needs.

It’s important to keep in mind that no home is perfect. In fact – even new homes can have several things that need fixing. It’s unrealistic to ask a seller to fix everything on a list. So, make sure you look at the inspection report with that in mind.

What is a home appraisal?

The purpose of an appraisal is to give the buyer, seller, and bank an idea of what the property is worth. An appraiser will look at many different factors of the property to determine its value. Unlike an inspection that goes into much more detail, appraisers don’t check the functionality of everything in the dwelling. Instead, depending on the type of loan, appraisers can check the functionality of the home's main systems (like heating and air). For example, with a VA loan, there are minimum property requirements to ensure safety and livability. An appraiser may also note obvious deficiencies.

Why should a buyer get an appraisal?

The appraisal will state the property’s value, which the buyer will need to get a loan. Mortgage lenders will not lend you money for a property that is not worth as much as you are asking for. So, the appraisal is necessary to confirm the value.

Why should a seller get an appraisal?

Sellers can get an appraisal. That way - they know how much their property is worth before putting it onto the market. Appraisals will show the actual value of their home. And how much buyers are going to be willing to spend on the property. Your realtor can also give you a good idea of value by looking at recent sales in your area.

What do appraisers look at?

  • Home. Check the interior, exterior, and overall appearance of the home.
  • Property Size. Look specifically at the square footage.
  • Neighborhood. Inspect the safety, cleanliness, streetlamps, sidewalks, and general appearance.
  • Homeowners Association (HOA). Confirm monthly and annual dues, what they include, and any current or future assessments.
  • Location. Appraisers assess the location's value by considering desirable surroundings, including good schools, nightlife, beautiful scenery, etc.
  • Home Age. How the home’s age affects the buying market.
  • Landscaping. Look at backyard size, curb appeal, and good use of space.
  • Renovations. How much work and money the past owners put into the house to increase its value.
  • Amenities. What makes this house special — for example, fireplaces, porches, pools, etc.
  • Permits. Generally, appraisers will only include permitted areas as square footage.

The final report will consist of real estate market trend statistics and comparable sales. It will also include any additional information regarding the home’s value.

After receiving this report, the lender can finalize your loan terms. If you’re getting an appraisal before selling your home, you can get a good idea of what your house will sell for. This report is good for 120 days.

Is a home inspection the same as an appraisal?

Now that you know what is a home appraisal and what is a home inspection – it’s easy to see their differences. Both inspections and appraisals are essential to both the buyers and the sellers. But, they serve very different functions in buying and selling a home. And, before you start shopping, it’s smart to get prequalified so when you find your dream home – you’re ready.

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1Rates are updated daily at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.