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What is the difference between an Appraisal and a Home Inspection?

If you are considering purchasing a home, you may find that it can be a bit overwhelming. There are many real estate, mortgage, and technical terms that may be confusing. One area that can be difficult to understand is the difference between an appraisal and an inspection. Getting a better understanding of the functions of both may help you make better, more informed decisions.

Home Inspection

A home inspection is usually scheduled and funded by the buyer before closing, and often before committing to purchasing the home. Some prefer the inspection before an offer is made. It can make or break a purchase, or give the buyer a negotiating tool. The inspector comes to the property to evaluate its structure and find any undisclosed issues. They will be looking at the foundation/basement, electrical, plumbing, built-ins, and roof. They will be looking for leaks, needed repairs, and building code violations. They will usually take photographs and give a detailed description of their findings. This could alert prospective buyers of any issues and could change the purchasing transaction.

Home inspections are for the buyer’s protection and can reduce or eliminate unpleasant surprises after you close on your home. If you do not know an inspection company, your realtor may offer suggestions. If you know someone who has recently been through a real estate purchase, ask for referrals. You can also check out professional organizations such as American Society of Home Inspectors, for tips and lists to help you choose.


An appraisal is an unbiased third party often assigned by the mortgage lender. Appraisals are necessary to make sure that all parties involved (buyer, seller, lender) receive an accurate and fair value for the property. Appraisers are highly trained and licensed and most lenders have a list of fair and unbiased appraisers that they pull from. They, like the home inspector, also do an inspection of the property to determine the condition of the home but do not go as far as the home inspector. They will verify square footage, compare findings to real property records, and check for comparable sales in the area. When the report is complete, all three parties receive copies of the detailed report that shows the home’s value and how the appraiser arrived at the calculations.


  • Both appraisals and home inspections require a trained professional to visit the home to fulfill a checklist
  • Both are usually paid for by the buyer
  • Appraisals and inspections are completed before closing
  • Both result in detailed reports that highlight a property’s functionality and integrity.


  • Home inspections deal with the condition of the property
  • Appraisals are used for determining the value of the property
  • Home inspections are not generally mandatory but are done as a protection for the buyer
  • Most lenders require an appraisal so that a fair value is placed on the property. This protects all parties involved.
  • Home inspections deal solely with the property being purchased
  • Appraisals also take into consideration the comparable sales in the area, market trends, and any other information pertinent to local home sales
  • Home inspections are nearly always funded by the buyer. The buyer may pay for all or part of an appraisal.

Buying a home can be an exciting and exhilarating time. It can also be confusing and a little scary. It is for these reasons, I am always here to help with all your financing questions and needs. If you are thinking about buying a home or if you have questions about home mortgages, get in touch with me or one of my team members today.

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