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Appraisal vs Inspection: What’s the difference?

Do you understand the difference between a property appraisal and a home inspection? Surveys show that many homebuyers – even those who have purchased homes before – have some level of confusion about these two key aspects of a home purchase.

Appraisals are an important part of the homebuying process that are designed to estimate a property’s value based on a number of different factors. They are typically ordered by lenders to make sure they don’t approve home loans for more than properties are worth. Appraisals also can be ordered by homeowners or sellers who want an accurate estimate of their home’s value. Appraisers typically document and photograph property amenities, inside and out. The home’s age, general condition, location, exterior and interior, size, upgrades and features are reviewed. Appraisal reports typically take into account a minimum of three comparable sales of nearby properties to arrive at an accurate appraisal value. It’s designed to be an unbiased estimate of a home’s fair market value.

A home inspection, by comparison, is a detailed, hands-on evaluation of a property’s condition. While a home appraisal is virtually a mandatory part of the home buying process if you’re taking out a mortgage loan, a home inspection is voluntary. But that doesn’t make home inspections any less critical. Inspectors look for costly defects and problems, such as roof issues, faulty heating/cooling systems, structural problems and leaky pipes, that could lead to costly headaches or safety issues immediately or in the future for anyone who owns the home. They’ll also document less serious issues that require maintenance or upgrades. It’s important to know that homes don’t pass or fail inspections — a home inspection report is simply designed to provide a summary of a home’s overall condition and areas that require attention. The inspector also doesn’t place a value on a property like an appraiser does. The inspection does not pass or fail a house like an appraiser might.

Many home buyers who pay for a pre-purchase inspection make their offer contingent upon that inspection. Inspections are even more critical when purchasing a distressed property, due to the more limited amount of information potential buyers may have access to about a property’s condition and possible problems. If you’re a seller, a home inspection can give you a better idea of the overall condition of your home, any issues that may crop up during the sales process and any items you may want to consider fixing before listing it for sale.

Both the appraisal and the inspection are key parts of purchasing any home. Reading both reports carefully is an important part of making an informed home buying decision.

Give us a call for all your home inspection needs 888-400-2740 or you can also schedule with us online at


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