Appraisal vs. Home Inspection: What’s the Difference?

If you’re like the average homeowner, you’re probably wondering what the differences are between an appraisal and a home inspection. There are several distinguishing factors to be aware of. Essentially, an appraisal determines a home’s value, while an inspection evaluates a home’s physical condition. Both uncover essential information about a home and can influence your purchase, and lenders often require both to be completed before approving a mortgage. The Jana Caudill Team is prepared to help you through every step of the process. Call our realtors to begin!

What Is An Appraisal?

An appraisal is an evaluation to determine a home’s estimated market value. A licensed appraiser will complete the assessment to ensure that the agreed-upon price is fair before securing the loan. Sellers use the appraisal to confirm that the listing price is suitable, which is completed in a pre-listing assessment. A home appraisal evaluates the following: 

• The physical condition inside and outside the home
• The home’s neighborhood and location
• Comparison to other homes nearby
• The size of the home
• Fair market value of the home

What Is A Home Inspection?

A home inspection involves investigating the property’s condition and determining what repairs will need to be made, if necessary. While an appraisal works to uncover a home’s value, the inspection is used to determine the condition of a home prior to selling. The inspection isn’t always required, but some lenders may ask that one is completed for the mortgage application.

After a buyer has placed an offer, they can hire an inspector to look at the home. This can protect the buyer and help them decide whether you walk away from the offer or negotiate a price based on the repair work that needs to be completed. The home inspection process involves the following steps: 

• Examination of the home’s structure and utilities, such as plumbing, water, electrical and heating
• Inspection of all physical structures, both inside and outside the home
• Determine necessary repairs

The home inspection doesn’t assign a market value; consider the home’s neighborhood or its size. Essentially, the home inspection intends to reveal a home’s physical condition rather than its monetary value, which is the goal of an appraisal. 

Key Differences

Now that you know what an appraisal is versus a home inspection, our realtors can help you understand the key takeaways of what makes these two processes different: 

• Purpose. A home inspection identifies necessary repairs and the home’s condition, while an appraisal uncovers the fair market value.
• Requirement. Appraisals are usually necessary for a mortgage, while inspections aren’t always required.
• Service Provider. A licensed home appraiser must complete appraisals while the inspection is done by someone who checks the home’s condition.

Contact Our Real Estate Agents For Advice

Whether you are buying or selling a home, you’ll benefit from having The Jana Caudill Team at your side. We can guide you through the entire process and provide professional advice. If you have questions about how an appraisal or home inspection will impact your search, give us a call today to set up an appointment with a realtor.