Home Inspection vs. Appraisal: What’s the Difference (and Do You Need Both)?
People mix these two up all the time, and I don’t blame them. Both involve a stranger walking through the house you want to buy. But they do different jobs for different people. The appraisal is the bank checking that the house is worth the loan. The inspection is you finding out what’s wrong with it.
Who hires them, and who gets the report
Your lender orders the appraisal. You usually pay for it through your closing costs, but you don’t pick the appraiser, and the report goes to the lender. You hire the inspector. You pick who you trust, and the report comes to you.
That difference is the whole story in one line. The appraisal protects the lender’s money. The inspection protects yours.
What each one looks at
An appraiser is estimating what the house is worth. They compare it to similar homes that sold nearby, and they note size and general condition as they affect that value. They’re not there to test anything.
I don’t tell you what a house is worth. I spend three to four hours on an average house looking at the roof, the structure, the plumbing, the electrical, the heating and cooling, and what’s going on in the crawlspace and attic. Here’s the full list. I’m looking for what’s wrong and what’s wearing out, so you know what you’ll be paying for after closing.
Can a good appraisal replace an inspection?
No. A house can appraise right at the price and still have a roof near the end of its life or a crawlspace that’s been wet for years. The appraisal tells you the bank is comfortable lending. It doesn’t tell you the water heater is eighteen years old. And if you’ve heard that an inspection finds everything, that’s a different myth, but the point stands: each one answers its own question and neither answers the other’s.
When your loan has repair requirements
Here’s where they overlap a little. FHA and VA loans have their own minimum property standards, and the appraiser checks them. If something fails, such as a roof problem, exposed wiring, a broken heating or cooling system, or a damp crawlspace, the repair can be required before the loan closes. Ask your lender which standards apply to yours.
This is one reason I like buyers to know the condition before the appraiser shows up. A wet crawlspace is a good example, and VA loans generally require a termite inspection as well. Finding those early gives you more time to deal with them than finding out from your lender. If the inspection does turn up something, this is what to do next.
Do you need both?
If you’re financing, the appraisal isn’t optional. Your lender will require it. The inspection is the one nothing forces you to get, and it’s the one I’d never skip. If you’re paying cash, there’s no lender asking for an appraisal, which makes the inspection your only look at the condition.
Which comes first
The inspection usually happens first, because your due diligence window is short and you want the findings while you can still act on them. The lender orders the appraisal once your loan is moving. Neither one waits on the other, so don’t hold your inspection for the appraisal.
If the appraisal comes in low
That’s a question about value, not condition, and it’s a conversation to have with your agent and your lender. It’s outside what I do. What I can tell you is that a low appraisal and a clean inspection are two separate facts, and you’ll want both in front of you.
Cover the condition side
A home inspection starts at $399, and I put what everything costs in writing. If you’re still deciding who to hire, here’s how to vet any inspector. Otherwise, schedule a home inspection online or call, and I’ll walk the whole house.