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Home Inspection vs. Appraisal

Do you know the difference between a home inspection and a home appraisal? Many home buyers use these terms interchangeably. While a home inspection and appraisal are very similar, there are some key differences to be aware of.

Appraisal vs Inspection

Home Inspection

A home inspection of a visual inspection of a property to assess its condition. It looks at the “bones” of a property to ensure it’s in good condition. Areas of focus of the home inspector include the roof, plumbing, electrical, chimney and roof.

A home buyer usually orders a home inspection, but a home seller can also order it. Why would a home seller order a home inspection? First, a home seller might order one as a marketing tactic. In seller’s markets where homes frequently have bidding wars, having a home inspection report available from a reputable home inspector can lead to more interest from potential home buyers making offers on the home with the peace of mind knowing that it’s likely in good condition.

The home inspector’s job is to let their client, either the home buyer or seller, know about the conditions of the property and any repairs that may be necessary. Based on the home inspector’s report, the home buyer can decide whether to move forward and make an offer, while the seller can determine necessary repairs to do to the property before listing it.

A home inspection is a money well spent. It helps the home buyer avoid surprise expenses that she or he wasn’t anticipating.


Not to be confused with a home inspection, an appraisal is a detailed report done by a licensed home appraiser. Its main purpose is to determine the value of the home. This is usually done in a couple of ways: based on the home’s market value and cost. The market value is how much the home would sell for in the open market, while the cost approach is how much it would cost to rebuild.

Like home inspection, the home buyer is usually responsible for the cost, but, unlike the home inspection, the appraisal is for the home buyer’s mortgage lender for mortgage financing purposes. Since the report is for the lender, even though the home buyer is paying for it, she or he doesn’t receive a copy of the appraisal report. Instead, only the lender receives a copy of the appraisal report.

The appraiser does inspect the property, although it’s far less rigorous than a home inspector would. For example, the appraiser also takes measurements and checks the number of bedrooms.

On top of that, the appraiser also looks at similar homes recently sold in the area. Based on that, it determines whether the home’s purchase price is a fair reflection of its true value.

The Bottom Line

Are you still not clear on the differences between a home inspection and appraisal? Speak with our mortgage experts today, who can answer any further questions you might have.

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