The Difference Between a Home Appraisal and a Home Inspection

Buying or selling a home, you will be hearing the phrase “home inspection” or “home appraisal.”

Now, you may have a vague idea of what a home inspection is. But what is a home appraisal? Are the two interconnected or completely different things?

A home inspection, as the name suggests, is a complete inspection of a house. A home appraisal on the other hand, is a market value assessment of the house you are planning to buy/sell.

Now that we have the basic difference set aside let’s learn about the two in more detail and see how and when to use a home inspection and an appraisal.

What is a Home Appraisal?

Mortgage lenders need this information to decide if they will give you a loan because the value of the home is collateral for the loan.

To put it simply, the home assessment makes sure that the house is worth the money that is being paid for it.

More or less, it’s how the loan protects itself in case the user stops paying their debt.

The lender should get all of its money back if the property goes through default and is sold.

If the next question in your head is, “who performs a home appraisal” the answer is simple.

As part of your closing costs, the lender will usually pay for a neutral third-party assessor to look at the property. The price could be anywhere from a few hundred to two thousand dollars.

A home evaluation tells you how much a professional thinks your home is worth in today’s market.

But what is involved in a home appraisal?

What are the values of homes based on?

To come up with a value, a home estimator usually does one of two things. The first thing an inspector can look at is the property’s size, location, and state, which can be seen during a visit.

Second, the appraiser looks at recently sold properties that are similar to the one being appraised (these are called “comps”) and adjusts the price based on things like changes made to the property, views, extra storage space, and so on.

Now that we have covered what a home appraisal is let’s see what a home inspection is:

What is a Home Inspection?

A home inspection is basically a complete examination of a house. Searching it A to Z.

A licensed home inspector examines as much of the house as possible during an inspection to get a good idea of its state. You don’t want to end up with a house you have no chance of living a quality life in, right?

Most of the time, a Buyer/Seller inspection checks the construction of the house, its roof, its plumbing and electrical systems, and its appliances, like the HVAC system, hot water heater, and kitchen appliances.

It could include inspections of mold, termites, or lead.

Basically, a home inspection will tell you if the house you are getting is liveable or not. Here is what is mostly covered in these inspections:

The Structure: Inspectors look at the base, the roof, the walls, and other parts of the structure.
Systems: This includes equipment for heating, cooling, plumbing, and electricity.
Interior and Exterior: Inspectors look at the windows, doors, floors, ceilings, and other parts of the inside and outside of a building.
Safety Hazards: Possible dangers, like mold or broken wires, are pointed out.

An inspection is worth the money because it saves you thousands of dollars in the long run.

It’s better to know what costs you’ll have ahead of time than to be shocked later. You may also be able to get the seller to lower the price of the house or fix some things before you close the deal.

When To Have a Home Inspection

An inspection is not always needed, but a house appraisal is standard procedure.

People who are buying a new home can pay for and ask for an inspection. In contrast, if you get a HELOC or a home equity loan, the bank might demand that you get one before the close. The cost of the home inspection will come out of your pocket.

By doing inspections, buyers, loans, and lenders can all avoid possible financial risks.

After a buyer’s offer is accepted by the seller, the buyer can do a review of the property. Buyers usually have five to ten days to get an inspection.

Additionally, buyers can ask for extras that fit the wants of the home. One example is asking for a pest inspection to look for ants or a pool inspection if the house has one.

When the inspector writes their final report, they will include any problems they find, such as a stove burner that doesn’t work or too much moisture in the attic that could mean there is a roof leak.

Home Inspection VS Appraisal. WhatsThe Difference?

Inspections look at how the property is maintained, while assessments figure out how much it’s worth in the real estate market.
Inspections are done by home inspectors, and evaluations are done by licensed appraisers.
Inspection reports point out problems and repairs, while appraisal reports give an idea of how much the property is worth.

When comparing a home inspection vs appraisal, there are some things that they have in common. Both home inspection and appraisal are professional inspections of a home that are done by professionals in order to close a real estate deal. Also, both can give you useful information that buyers can use to negotiate the price of a new house.

The assessment and inspection are important steps in the home-buying process, and you don’t have to handle them on your own. Need help understanding the difference between a home inspection vs. appraisal?

Total House Inspection is your reliable partner in this situation. Total House Inspection offers professional home inspection services when buying or selling a home.