Appraisals vs. Home Inspections, What is the Difference?

When buying a home, two terms you’ll hear often are appraisal and home inspection. While they may sound similar, they play very different roles in making sure you’re making a sound investment. Understanding the difference can help you navigate the process with confidence.

What Is an Appraisal?

An appraisal is conducted by a licensed appraiser to determine the fair market value of the property. Lenders require an appraisal before approving a mortgage to ensure the home is worth the amount being financed. Think of it as a safeguard for the bank and for you, making sure you don’t pay more than the home is truly worth.

• Ordered by the lender, not the buyer
• Focuses on property value, not condition
• Uses comparable sales in the area

What Is a Home Inspection?

A home inspection is arranged by the buyer and performed by a certified inspector. It focuses on the condition of the property, uncovering potential issues that could require repairs or impact your decision to buy. This step helps protect you from unexpected costs after closing.

• Ordered by the buyer, not the lender
• Examines condition of roof, plumbing, HVAC, foundation, and more
• Identifies safety hazards and repair needs

Appraisal vs. Inspection: Key Differences

Appraisal	Home Inspection
Determines market value	Assesses condition of property
Required by lender	Optional, but highly recommended
Protects the bank’s investment	Protects the buyer’s investment

Why You Need Both

Both an appraisal and a home inspection are essential in the homebuying process. The appraisal ensures you’re paying a fair price, while the inspection ensures you’re buying a home that’s safe and structurally sound. Together, they give you peace of mind and help you move forward with confidence.