When you’re in hot pursuit of your first (or next) home, you may hear the terms “appraisal” and “home inspection” bantered around interchangeably. In both cases, trained professionals come out to assess the property with their checklists in tow. But that said, the purpose for a home inspection and an appraisal couldn’t be more different, and each serves a specific purpose.
An appraisal is about the value of a property and determining the markets value.
An appraisal is performed by an unbiased third party to determine the accurate value of a property. Appraisers do inspect a property but do not go to the lengths a home inspector does. Instead, they look at fundamentals such as square footage, condition of the home, property size and location in comparison to homes like it that have sold in the area. Appraisals are based off of other homes that have sold, not homes that are listed for sale.
An appraisal is also an assessment from a monetary perspective that helps your loan officer, determine how much they can lend for the home you’re buying.
A home inspection is about a home’s condition.
A home inspection educates the buyer of any immediate or potential future problems. Inspections can include structural elements (including the foundation), plumbing, electrical, appliances, heating/cooling systems, basement, garage, roof and more. This occurs before you close on a home and often before committing to the purchase of the home. It’s really about avoiding preventable surprises later after you’ve purchased the home.
In today’s purchase market, it is tempting to forego a home inspection as a condition of a home’s purchase. This is a conversation you will want to consult with your realtor about. A home inspection generally costs around $500 and can be a smart investment on the front end to avoid what could be thousands of dollars of repairs or issues later.