When you’re getting ready to buy or sell a home, an appraisal and home inspection are part of the process. Since both assessments require a deeper look at your home to aid in the sales process, many first-time home buyers have difficulty differentiating between the two. However, there are some key differences between them:
What is a Home Appraisal?
An appraisal provides valuable information for the buyer and seller, but an appraiser’s primary mission is to protect the lender. Lenders don’t want to own overpriced properties, so appraisers take a look at a home before the lender grants final approval for a buyer’s loan.
Although appraisers will take note if a house shows signs of neglect – from chipped paint to broken windows – this is not their primary focus in determining a home’s value. Instead, they’ll look at a variety of other factors, including:
- Proximity to desirable schools
- Lot size
- Size and overall condition of the home
- Recent sales prices of comparable properties
- Market opportunity
While appraisals can vary slightly among appraisers, they should all be within the same ballpark, since real estate appraisers must adhere to state-sanctioned minimum standards and licensing practices.
What is a Home Inspection?
An appraisal isn’t a substitute for a professional home inspection. While the appraiser formulates an opinion of a property’s value, the home inspection will educate the buyer about the condition of the home and its major components.
The inspector will key in on the home’s existing and potential future issues, alerting buyers of any red flags or areas that need repair. This will not only help the buyer negotiate a fair purchase price, it will also give them an idea of the home’s safety and potential maintenance needs.
Inspectors take a deeper look at a home’s overall condition and mechanical systems, including the state of the home’s:
- Roof and attic
- Rooms and stairways
- Basement and/or crawl space
- Foundation and structure
- Plumbing system
- Electrical system and appliances
- Heating and cooling system
To learn more about the differences between an appraisal and home inspection, check out our video here.