Posted by Apex Home Loans ● February 11, 2021

The Difference between an Appraisal and a Home Inspection

Whats the Difference between an Appraisal and a Home Inspection

If you’re like many other first-time homebuyers, you may be wondering what the difference is between an appraisal and a home inspection. An appraisal is a professional evaluation of the market value of the home you’d like to buy to determine that the purchase price supports the home’s condition, age, location, and features. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money. A home inspection is another important step, which assesses the condition of the home before you finalize the transaction, but is something that the buyer does on their own as it is not a required by the lender. Let’s dive a little deeper into each one!

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 apply for a mortgage, an unbiased appraisal (that is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’re going to use a mortgage to fund your purchase, the appraisal will help make sure the lender doesn’t loan you more than what the home is worth.

This is especially important in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can also push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption the competing buyers will be willing to pay more.

Home Inspection

Here’s the key difference between an appraisal and an inspection, MSN explains:
“In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”

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 in question during the home inspection process – maybe the age of the roof, the state of the HVAC system, or anything else – you as the buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final.

Bottom Line

The appraisal and the inspection are critical steps when buying a home, and Apex Home Loans is here to help you along the way. Connect with us today so you can have the expert guidance you will need to navigate through the homebuying process.

Get Pre-Approved   Apply Now   Contact Us


Topics: move up buyer, Homebuyer