If you are buying a home for the first time, you may think an appraisal and a home inspection are the same thing. They aren’t. They are both important factors in the home buying process but are completely separate even though they have some similar features. Here are the key differences between a Home Inspection and an Appraisal.

What is a Home Inspection?

A Home inspection is a safeguard for buyers to evaluate the home they have agreed to purchase. In most cases the buyer has put a contingency on the sale pending the outcome of a home inspection. The seller usually has the right to cure (fix) any issues that show up on the home inspection or the two parties can renegotiate price based on the report. 


A Home Inspector:
  • Does NOT determine value of a home
  • Does point out all problems in the home to provide a detailed report for buyer (or seller if they are doing a presale inspection)
  • Is hired by and typically paid for up front by the buyer in a home sale


What is an Appraisal?

An appraisal is the process in which a bank or lender determines the value of a home for lending purposes. Basically, if they are going to loan money to a buyer to buy a home, they want to ensure the home is worth the amount being financed in case of default. If the home appraised less than the agreed purchase price, the seller may have to change the contracted purchase price.

An Appraiser:
  • Does determine the value of home (although value is subjective)
  • Does NOT provide detailed information on problem areas of the home
  • Is Hired by the lender
  • The appraiser is typically paid for by the buyer but is usually including in closing costs


How are appraisals and home inspections similar?

  • Both Appraisals and Home Inspections are typically hired by the seller and meant to protect the seller from a bad investment
  • Both are conducted by professionals that are typically certified or licensed
  • Both happen shortly after an accepted offer in a home sale agreement
  • Both can potentially disrupt a home sale contract


How are appraisals and home inspections Different?

  •  An appraisal is a general evaluation of the homes value while a home inspection is a very detailed report on the homes condition
  • The appraisal offers an estimate on the homes value while the home inspection does not
  • The appraiser does a general walk through while the home inspector gets in every nook and cranny of the home to find any issues
  • The buyer can choose what company they use for the home inspection but really have no say in who does the appraisal


Both home inspections and appraisals are key components of the home buying process. It is important to know the difference when making one of the largest investments of your life. If you are buying your first home, do your homework. Find a qualified home inspector and a reputable lender to make sure you are protected through this process. 

For more important guidance on home inspections see:

When Should I Schedule My Home Inspection

10 Home Inspection Myths

Do Contractor Matching Services REALLY Help You the Consumer?