Home Inspection vs Appraisal: What's the Difference and Why You Need Both

Lisa Mailhot  |  April 20, 2023

Buyers

Home Inspection vs Appraisal: What's the Difference and Why You Need Both



If you're in the process of purchasing a new home, getting an inspection is an essential step to consider. It allows you to evaluate the home's condition before closing the deal, which is crucial for making an informed decision. However, an inspection differs from an appraisal, which is a professional assessment of the home's market value. Lenders usually require an appraisal to ensure that the property's value is in line with the amount they're lending to the buyer. In this article, we'll provide a breakdown of both inspections and appraisals and explain why they're crucial when purchasing a home.

Home Inspection

Here’s the key difference between an inspection and an appraisal. Bankrate says:

“In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.”

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.

Home Appraisal

The National Association of Realtors (NAR) explains:

A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”

When you're applying for a mortgage, an impartial appraisal is an essential tool to confirm the home's value based on the sale price. It's not just about how much you're willing to pay for the property - the lender needs to ensure they're not loaning you more than the home is worth. This is particularly important in today's competitive sellers' market, where limited inventory can lead to bidding wars and inflated prices.

In such scenarios, sellers may be tempted to set a higher price, assuming buyers will pay whatever it takes to win the bid. However, the lender's appraisal ensures that the buyer only borrows based on the home's actual value, which helps maintain a balance in the market.

If there's any discrepancy between the appraisal and the sale price, your trusted real estate professional can assist you in negotiating with the seller. So, when you're in the home-buying process, don't forget the critical role an appraisal plays in ensuring a fair deal for all parties involved.

Bottom Line

When purchasing a home, both the inspection and appraisal stages are crucial, and you don't have to handle them alone. With the help of an experienced real estate professional, you can receive the expert guidance you need to navigate the entire home-buying process seamlessly. Don't hesitate to reach out and connect today to ensure that you have the support you need to make informed decisions and secure your dream home.


Recent Blog Posts

Stay up to date on the latest real estate trends.

Buyers

Navigating Lessons from the Real Brokerage Settlement's Shifting Landscape

Lisa Mailhot  |  April 12, 2024

Discover insights into the recent $9.25 million settlement between Real Brokerage and commission suits. Learn about the implications for buyers, sellers, and agents in… Read more

Buyers

Hot Vacation Home Markets Ripe for Investment in 2024

Lisa Mailhot  |  April 12, 2024

Discover the top vacation home markets across the U.S. experiencing remarkable price appreciation in 2024. Learn how to capitalize on these trending destinations as an… Read more

Buyers

New Rules Shine a Light on Cash Deals in Real Estate

Lisa Mailhot  |  April 11, 2024

The U.S. government is tightening regulations to combat money laundering in residential real estate transactions. This blog explores the proposed rules requiring real … Read more

Buyers

A Beginner's Guide to Building Wealth and Financial Wellness

Lisa Mailhot  |  April 10, 2024

Discover how to kickstart your financial journey with expert advice from Tiffany Aliche, The Budgetnista. Learn three essential steps to release financial shame, seek … Read more

Buyers

Embrace Luxury Living in Pasadena's Brantwood for Active Seniors

Lisa Mailhot  |  April 9, 2024

Discover Brantwood, a luxurious 55-unit apartment complex in Pasadena's vibrant Playhouse Village, offering all-inclusive lease plans and boutique hotel-style service… Read more

Buyers

Shifting Grounds in Real Estate After NY Lawsuit

Lisa Mailhot  |  April 8, 2024

Dive into the heart of a groundbreaking antitrust lawsuit in New York that could redefine real estate transactions nationwide. This blog post offers a comprehensive an… Read more

Buyers

Celebrating Endurance and Vision: Lessons from 50 Years in Real Estate

Lisa Mailhot  |  April 5, 2024

Explore the journey and insights of William Raveis, a real estate visionary, who has led his brokerage to success over five decades. Learn the secrets of endurance, in… Read more

Buyers

America's Hottest Housing Markets Signs of Cooling Off

Lisa Mailhot  |  April 4, 2024

Renters often feel limited in making their homes eco-friendly, but there are small steps you can practice to reduce your carbon footprint and live more sustainably, ev… Read more

Buyers

Thriving Through Turmoil: Realtors' Guide to Crisis Management 

Lisa Mailhot  |  April 3, 2024

Learn essential crisis management tips for handling commission uncertainty in the ever-changing real estate landscape. Gain insights from industry expert Julia Lashay … Read more

Let’s Talk

You’ve got questions and we can’t wait to answer them.