For first-time home buyers, it’s easy to get all the different terminology related to the housing market confused. Take, for example, home inspections and appraisals—after all, both involve a professional doing some type of examination and evaluation of the premises. So, what’s the difference between the two? Let’s break it down.
What Is a Home Inspection?
A home inspection is exactly what it sounds like: an inspection of a home! The process involves a professional inspector—someone appropriately licensed or certified by the state—visiting the property to thoroughly examine the home’s condition. The inspector’s job is to check for damage, hazards, or other types of issues present, thereby providing a comprehensive review of the home’s structure and major systems. A basic inspection includes an examination of the foundation, HVAC, electrical systems, plumbing systems, major appliances, floors, walls, roof, and so much more.
What Is a Home Appraisal?
Meanwhile, a home appraisal is a walk-through and general assessment of a house conducted by an appraiser to determine its fair market value (or what that home is worth). An appraiser is interested in the home’s:
- Square footage
- Number of bedrooms and bathrooms
- Lot size
- Overall condition
Although the appraiser does a site visit, most of their work is actually done in the office when they research to compare the home’s size, location, and features to recent sales nearby. Using all the information they’ve collected, the appraiser then provides an unbiased opinion of the home’s value.
Differences Between Home Inspections and Appraisals
While both home inspections and appraisals ultimately provide the prospective buyer with professional insight to help them avoid a major financial mishap, the key difference is their primary functions. An inspection gives you an understanding of the home’s condition; an appraisal gives you an understanding of the home’s value. (It’s worth noting, though, that an inspection can affect the selling price if issues are found and the buyer negotiates for a lower price.) Other differences include:
- Appraisals are usually required by the lender financing the house, whereas inspections may not be required but are still strongly recommended.
- Appraisals are usually between the buyer and the buyer’s lender, whereas inspections tend to be between the buyer and seller.
- Neither the home buyer nor seller is typically present for appraisals, whereas prospective buyers are encouraged to be present for inspections so they can ask the inspector questions and get explanations.
- The appraiser is normally hired by the lender; the inspector is hired by the buyer or their real estate agent. The buyer pays for both services.
Home inspections and appraisals share many similarities, but in summary, an appraisal gives a buyer peace of mind that they’re not overpaying for a property, while an inspection provides peace of mind by uncovering any potentially costly issues and necessary repairs. When you’re in need of an inspection, contact our team of experts at The Homeinex Corporation.