The Difference Between a Home Inspection and a Home Appraisal

Matt Marandola
Written by Matt Marandola
Updated September 28, 2021
Man and woman standing look over living room
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Home inspections focus on the condition of the home, while home appraisals focus on value

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The home buying process is full of so many little steps, it can get confusing at times. In particular, many home buyers and sellers can get tripped up when it comes to the difference between a home inspection versus a home appraisal. Home inspections are focused on any major problems and the condition of everything in the home, while home appraisals focus more on curb appeal and the home’s value.

Both the home inspection and home appraisal play an important part in your home buying journey, so we’ve further broken down the differences between them below so you can go into each with confidence.

What Is a Home Inspection?

A home inspection involves an inspector going through a list of items to ensure the house is in working order before you sell it. A home inspector will go through major components, such as an HVAC system, and minor details, such as how easy a doorknob turns.

The buyer should be there during a home inspection so they can know upfront if there’s anything wrong with the home. If you’re the buyer, you’re like the one who will want to hire a local home inspector, though you can try and negotiate this with the seller.

Sellers may also want to be present in the event that there’s something wrong or the home inspector can’t reach a certain area. Make sure to tidy up beforehand so the inspector has easy access to things like the basement, electrical panel, and attic.

What Does a Home Inspector Look for?

A home inspector focuses on these major areas:

  • Heating system: Heats to the desired temperature, no smoke, and energy usage is within standards

  • Central air system: Cools to the correct temperature as well as checking ventilation and energy usage

  • Interior plumbing: Toilets flush, faucets run, and the condition of the piping is acceptable

  • Electrical: Lights, appliances, and outlets all work, and the condition of the wiring is good

  • Roof: Looking for leaks, missing shingles or pieces of the roof, mold, and sometimes pests

  • Attic and insulation: Inspecting for noticeable damage to the structure of the attic and ensuring insulation is in working order

  • Walls and ceiling: Checking for cracks, dents, and leaks

  • Floors: Seeking out chips, mold, and creaks

  • Windows: Ensuring proper sealing and that each opens, closes, and locks

  • Doors: Making sure each opens and closes, door knobs turn, and door frames are in good shape

  • Foundation: Ensuring there are no signs of cracks or leaks

  • Basement (if applicable): Being sure there is no exposed wiring and no obvious damage to walls or stairs

  • Structural components: Making sure there are no signs of bowing in the walls or damage to the joists and studs

An inspector will then look into smaller items such as loose flooring and even faucet pressure if need be. It’s not uncommon to see dozens of small items, so don’t fret if you see a long list.

Who Pays for the Problems on the Home Inspection Report?

This decision will come down to a matter of negotiation. Any small problems like a squeaky door or a torn screen will generally fall to the buyer. They may want to make specific changes to these items anyway, so there’s no need to waste money.

Big problems, such as a failing septic system or lead pipes, may come down to the seller. But this is a scenario-by-scenario basis.

A buyer may request that the problem be taken care of before they finalize the sale so that it falls to the seller to handle. Or a buyer may request that the cost of the repair be taken off the final price of the home.

How Long Does a Home Inspection Take?

Home inspections typically last around three to four hours, depending on the square footage and ease of access to the areas. So, large houses may take upwards of all day, while small homes may only take an hour or two.

Most reports come in within 24 hours, but it could take as long as a week if the home inspector finds various problems. You might also have to wait longer if your area is having a surge in sales and the inspector is particularly busy.

What Is a Home Appraisal?

A home appraisal focuses on things like curb appeal, home location, and the home’s functionality to determine a fair price. Lenders require an appraisal before they finalize a mortgage to ensure the financial institution is making a safe investment as well.

Who Pays for the Home Appraisal?

Because lenders require an appraisal, they’ll either pay upfront fees when they hire a local property appraiser or move it into their closing costs. Buyers and sellers don’t necessarily need to be present when an appraiser comes by, as they’re not looking into the smaller details like a home inspector would.

What Does a Home Appraiser Look for?

Appraiser looks over house
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A home appraiser will look at a multitude of different items that would affect the overall cost of the home. These items include:

  • Square footage: General rule of thumb is the more useable square footage in a home, the higher the appraisal number

  • Floor plan: How well that square footage is used, how many bathrooms, bedrooms, and other liveable space

  • Amenities: Items such as a deck, patio, or workshop tend to increase the estimated value

  • Luxury items: Outside kitchens, swimmings pools, and home theaters are considered luxury items and tend to give a large increase to the estimated value

  • Location: Proximity to schools, groceries, and any large metropolitan areas can increase home value

  • Curb appeal: Exterior paint, front-yard landscaping, condition of walls, windows, and doors that are seen from the curb can literally increase curb appeal

  • Roofing: Roofing material and condition can also affect a home’s value

Does a Home Inspection Affect the Home Appraisal?

A home appraiser may ask for a copy of the home inspection to look into the home’s overall condition. If there are major items such as a leaking roof, broken HVAC system, or a failing electrical system, then this can be expected to decrease the overall value of the home. This is a case-by-case situation, though.

What Happens if an Appraisal Comes in Under the Asking Price?

If an appraisal comes in far enough below the asking price, then the seller needs to make a decision due to the low home appraisal. They can either lower the price to the appraisal point or within a reasonable amount or choose to maintain the price point and let the sale fall through.

Can You Appraise or Inspect a Home Yourself?

While there are certain situations where you can inspect or appraise a home yourself, it’s rarely a good idea to do so. Whether you’re the buyer or the seller, it creates an ethical dilemma where either party could act in bad faith for the sake of making the best deal.

More commonly, you’ll find that the buyer skips the appraisal and inspection process when using cash rather than a mortgage.

Home Inspection vs. Home Appraisal

At the end of the day, these two parts of the closing process aren’t interchangeable. They both play an integral part in the process that helps protect both the buyer and the seller.

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