Appraisals and Inspections

What’s the Difference Between an Appraisal and an Inspection When Buying a Home?

Sometimes it feels like there are a lot of hoops to jump through to buy a home—and appraisals and inspections might be two of them. A home appraisal and a home inspection are both important parts of the home-buying process that can protect your financial investment. But what’s the difference between them?

Let’s look at appraisals and inspections in the home buying process to understand the difference between the two terms, why they are important, and answer some frequently asked questions.

What is a Real Estate Appraisal?

If you’ve ever wondered, “How much is my house worth?” you may benefit from an appraisal. When you’re buying a home, an appraisal is usually part of the process.

A real estate appraisal—or home appraisal—involves a walk-through and assessment of the home by a licensed professional appraiser. The appraiser will compare the home’s location and features with other recent comparable home sales in the area to determine the property’s fair market value.

What is a Home Inspection?

If you’ve ever wondered, “Is there something wrong with my house?” you may benefit from an inspection. When you’re buying a home, an inspection is sometimes part of the process.

An inspection looks at the condition of the home you’re buying. A licensed home inspector will use a home inspection checklist to do a comprehensive assessment of the property. After the inspection, they may provide recommendations on items that should be repaired or replaced before closing the real estate transaction.

How are Appraisals and Inspections Different?

Both an appraisal and inspection assess the interior and exterior condition of the home, and both offer the homebuyer protection and peace of mind. But there are a number of ways appraisals and inspections differ:

• The appraisal determines the home’s fair market value.
• The inspection determines the home’s condition.
• An appraisal is usually required by lenders, while an inspection is not.

Why Do You Need an Appraisal and an Inspection When You’re Buying a Home?

Most lenders require you to get an appraisal to approve financing your home loan. This ensures they are not financing a loan for more than it’s worth. A home inspection is usually not required, but it is an important part of the homebuying process. It can help you protect your financial interest by identifying any problems with the home.

Some homebuyers are willing to waive an appraisal or inspection if the home is being sold “as is” or if they want the transaction to close quickly due to competing offers. Each person’s homebuying journey is unique, and understanding the appraisals and inspections can help you navigate yours with confidence.