Home inspections and appraisals are both important parts of the home buying process. Whether you’re a homebuyer or a seller, it can be easy to confuse the two. While they may seem similar, there are some key differences between an inspection and an appraisal.

Both inspections and appraisals rely on licensed professionals to evaluate your home. However the distinct difference is that one focuses on the condition of the home and the other focuses on the property’s value.

Below we’ll explore both of these evaluations, their differences, and why they are both integral parts of the real estate transaction.


A home inspection is a visual overview of a home’s structure, condition, and systems. The inspector prepares an analytical and visual report that’s valuable to both purchasers and homeowners. The report details a property’s condition, including the assessment of necessary or recommended repairs, maintenance concerns and any other potential issues.

You can anticipate that your inspector will check the foundation, roof, attic, major appliances, electrical, plumbing and HVAC systems in your home. You may also request additional inspections such as radon air testing, water quality, septic systems, mold testing, and pest infestations.

A home inspection is generally performed after a purchase agreement has been signed by a buyer and a seller. This agreement may include an inspection contingency which is designed to protect homebuyers. Within this clause, the buyer may use the findings in an inspection to negotiate repairs or the sale price, or even to walk away from the purchase.

Home inspections may also be done prior to the listing of a home.  The seller has to pay for the pre-listing inspection but they receive a report of the exact condition of their property. This offers advantages such as making the challenge of pricing their home more straightforward and accurate. Additionally, the seller is able to make necessary repairs so the likelihood of negotiations after the buyer’s inspection lessens.

Home inspections educate clients on the condition of their home and provide a negotiation tool or an “out” if drawn into a purchase agreement. Moreover, inspections can provide an educated idea of ongoing maintenance a home may require, assist in forecasting future costs, and better inform you in how to protect your investment.


A home appraisal is an opinion of the property’s market value. An appraisal report is prepared for the lender and includes  elements that a lender would want to consider when determining if a property is sufficient collateral to grant a loan. The appraiser follows an identified process to provide an analysis of the interior and exterior features of the property, comparable properties in the neighborhood, recent sales and listings, land value, and market conditions.

Lenders often require appraisals to determine how much money they will lend a buyer so most homebuyers will have one prior to reaching the closing table. It’s not unusual for the mortgage lender to choose an unbiased third-party appraiser and for the buyer to pay the fee. Appraisals are beneficial to the buyer because they ensure the home is worth the price.

It’s less common to have a pre-listing appraisal than it is to have a pre-listing home inspection. This is because real estate agents should have an understanding of the fundamental principles of value. They usually can give their clients an accurate comparative market analysis (comparison of the prices of recently sold similar homes). This helps their clients come to a fair and reasonable asking price for their home without an appraisal.

Basically appraisals place monetary value on the features and condition of a home and help to determine whether or not a lender will accept the property as security for a loan. If an appraisal is lower than the agreed upon price the seller may lower their asking price, the buyer can pay the gap differential in cash, or the appraisal could be disputed. 

Other details your appraiser will consider:

  • Square footage
  • Number of bedrooms and bathrooms
  • Code compliance
  • Age of home and features
  • Location
  • Curb appeal



  1. Educate the buyer/seller about the condition of the home and its components.
  2. Lenders do not require inspections.
  3. An inspection will not impact your ability to get a loan.
  4. Inspectors discover deeper issues in a home.
  5. Homeowners are encouraged to walk through the home with the inspector.
  6. Purchasers/homeowners are given information at the inspection.
  7. Inspections usually occur before the buyer’s purchasing decision.
  8. Inspections focus on existing and potential future problems of the home.


  1. Inform the lender/buyer/seller of the value of the home and property.
  2. Lenders usually require an appraisal.
  3. An appraisal impacts the loan amount received.
  4. Appraisers typically note items visible to the naked eye.
  5. Appraisals often happen without the presence of the buyer or seller.
  6. Reports are sent to the mortgage lender.
  7. Appraisals usually happen after a buyer has decided to purchase a property.
  8. Appraisers focus on value based on features, conditions, the market, and comparable recently listed and sold properties.


Generally the inspection is for the buyer to feel secure in their purchase and the appraisal is for the lender to feel secure about their investment in that purchase.  Home inspections and appraisals also offer sellers the ability to prepare so that they may get the most out of the sale of their home.

Separately inspections and appraisals are important and provide valuable information throughout the real estate transaction. Together they provide detailed reports regarding the property’s state, functionality, and integrity and deliver the involved parties an unbiased evaluation of a home.

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