Home Inspection vs. Appraisal: What's The Difference?

Whether you're buying a house or selling a house, both the Home Inspection & Appraisal are two of the biggest hurdles you have to overcome to reach your real estate goal! But for lots of folks, they mistakingly believe these two are the same. So let's dive in:

Home Inspection

While a home inspection is not required when buying a home, it is strongly recommended. A home inspector is hired by the Buyer and traditionally inspects the home during the Buyer's Due Diligence period (first few days after going under contract). Typically, a home inspector spends approximately 3-4 hours checking anything and everything about the home, from the crawl space or basement up to the roof. They check plumbing, electrical, interior, exterior, some appliances, doors, windows.... you name it, they probably inspect it! They can also add on ancillary inspections like radon testing, termite inspections, structural inspections, mold inspections, etc. While pricing varies by inspector, you can expect a home inspection to cost anywhere from $400-$750 plus costs for additional inspections/testing.

Appraisal

Unlike a home inspection, an appraisal is required if a Buyer is financing the home through a traditional mortgage (though there are some scenarios when lenders are able to waive an appraisal, this is not often). The Appraiser is selected through the Buyer's lender (most often, the lender uses an Appraiser Management Company to select the actual appraiser), not by the Buyer themselves. The Appraiser visits the home after Due Diligence (most often) and only spends about 20-30 minutes walking through the property. While there are some things they must check for reporting purposes, they do NOT thoroughly inspect the home. Their goal is two-fold: 1) To ensure the property meets minimum property requirements for the Buyer's loan type (varies by loan program), and 2) To ensure the lender is making a sound investment & that the Buyer is not overpaying for the property. Appraisals typically cost approximately $500, and they are either paid up-front by the Buyer OR listed as a fee in the settlement statement at closing.

Both of these services are critical to the overall sale of real estate, but they do serve two very different purposes!

Questions about either of these services or what they mean for you in the buying and selling process? Let's chat!