What’s the Difference Between an Inspection and an Appraisal?

home inspection

When buying a home, buyers not only look for the best price, they also want to make sure the property is everything the seller claims it to be. This is why home inspections have become an accepted part of the home buying process. As Paramount Management explains, it protects buyers by ensuring they do not encounter any unpleasant surprises after they complete the purchase of a property.

Most homebuyers, (and sometimes home sellers) understand the value of home inspections and are happy to pay for the service. But what about the home appraisal, is it entirely necessary in the home buying process? And, is an appraisal not the same as an inspection?

These questions are often asked by people who are new to the home buying process. Most of them assume the home appraisal is simply a home inspection by a different name. As a result, they think it is an unnecessary waste of time and money.

Is this view correct; are home appraisals no different from home inspections? Below we explain what each process is, their respective functions, how they are different, and most importantly, why appraisals and inspections help protect buyers’ interests.

What is a home appraisal?

Home appraisals are required for nearly all mortgage loans. They are conducted by third-party appraisers who evaluate the home based on its condition, location, and the value of comparative homes. The appraiser does a walkthrough of the home and surrounding areas. They also analyze sales data for similar homes that recently sold in the area. They then combine all this information to determine the home’s estimated market value.

What is a home inspection?

A home inspection is a highly detailed examination of the physical structures and systems of a house. The inspector goes through the home using a checklist of 1,600 items that guides him or her through every component of the property. The goal of the inspection is to uncover any underlying issues with the property. It gives prospective buyers a more complete view of the house and allows them to make a more informed decision about whether to buy or not.

Difference between the appraisal and inspection


A home appraisal determines the value of the home. It helps lenders ensure that a house is not overvalued since the property will serve as collateral for the loan. This is so that in the event that the borrower defaults, the bank will be able to recover its funds by selling the home.

The home inspection determines the physical condition of a home. It helps the buyer assess the risk of buying the property.

Required by whom

The home appraisal is required by lenders as part of the mortgage process and the appraiser works for the lender. The home inspection is set up by the buyer and the home inspector works for the buyer (or seller, in the case of the seller’s inspection).


A home appraisal involves a simple walkthrough of the home. An inspection is a grueling assessment that can take up to three hours.

Impact on a home loan

An appraisal can determine how much money a borrower is able to borrow. If the appraiser values the home lower than its offer price, the borrower will make up the difference if they proceed to buy the house. Home inspections do not affect loan amounts.

The process

The appraiser conducts only a visual inspection of the home. The inspector does a visual inspection but also uses special devices and specific know-how.

Buyer involvement

Buyers are usually not allowed to be present during the appraisal. Buyers are encouraged to be present during an inspection by The Best Property Inspections LLC (when COVID-type situations allow), and the inspector will discuss the problems they uncover with the buyer.


The appraisal factors the condition of the home and its features; lots sizes in the area; school zones; crime rates and the value of similar homes in the neighborhood. An inspection concerns itself only with the physical state of the home.

The report

At the end of the appraisal, the appraiser gives a report of their findings to the buyer, seller, and lender, with explanations on how they arrived at their estimated value for the home. The result of an appraisal is somewhat subjective because it is based on the appraiser’s interpretation of data.

After the inspection, the inspector gives a detailed report to only the buyer. The report does not recommend any course of action; it simply supplies the buyer with the information they need to make a good decision. The result of the inspection is more objective because it looks at the actual physical condition of different parts of the home.

Benefits: why you need an appraisal and inspection

The home appraisal ensures that you do not overpay for the home, it gives you a basis for renegotiating with the seller and helps you avoid paying excessive property taxes.

The home inspection will give you intimate knowledge of the home’s condition so that you can be confident about the purchase. Based on the inspection, you can assess the cost of future repairs or use the report as a negotiation point during closing.

Danielle Marshall is an employee of Paramount Management & Realty. Paramount Management & Realty manages rental properties in Phoenix, Arizona. Paramount provides residential management, commercial property management, HOA management, and multi-family management services.

© Copyright The Best Property Inspections | Website by Spectora | Privacy Policy