Key Differences Between Appraisals and Home Inspections

Some consumers confuse the role of appraisers with that of home inspectors. But important differences exist between the services offered by those professionals.

Money vs. maintenance

Appraisals are completed to provide a credible, reliable opinion of a property’s value. Inspections are performed to give prospective homebuyers insight into a home’s plumbing, electrical, roof and other features to help determine its condition.

Lenders and homebuyers

Lenders order appraisals to get a stronger understanding of risk relating to the underlying collateral offered in a mortgage. Appraisals are not technically provided to confirm a sales price, although they can help lenders and consumers in making sound financial decisions. Home inspections are requested by consumers, and while not required, certainly have benefits.


Walking away

Lenders base the loan amount on the appraisal; if a property appraises for less than the loan amount, usually the buyer has to make up the difference. However, even if the numbers work, buyers might not be willing to purchase a property if many physical issues exist.

Different items

Appraisal reports include property features such as lot size, number of bedrooms and bathrooms and amenities such as swimming pools, along with a comparison to neighboring properties. Home inspection reports typically highlight items such a water damage, mold and termite damage. Consumers are encouraged to carefully review both reports to confirm factual accuracy, and point out any errors, as appropriate.

While appraisals and home inspections are performed by different professionals for varied purposes, both can help consumers make informed decisions before agreeing to a significant financial commitment.


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