The Difference Between an Inspection and an Appraisal

The Difference Between an Inspection and an Appraisal

When purchasing your first home, you might encounter various terms and conditions that are new to you. For example, while you might have a basic understanding of what an inspection involves, you may not fully grasp its importance or how it differs from an appraisal. To clarify, here’s a breakdown of what each one entails and why they matter to you as a homebuyer.

Home Inspection

Once you’re under contract on a home you want to buy, getting an inspection becomes a crucial part of the process. An inspection provides a clear understanding of the home's safety and overall condition, which is essential for such a significant transaction. As a recent Realtor.com article explains:

“A home inspection is something that protects your financial interest in what will likely be the largest purchase you make in your life—one in which you need as much information as possible.”

If anything raises concerns during the inspection – such as the age of the roof, the condition of the HVAC system, or other issues – you have the option to discuss and negotiate potential repairs or adjustments with the seller before finalizing the transaction. And don't worry – you won't have to navigate this process alone. Your real estate agent will advocate for you and handle negotiations with the seller on your behalf.

Home Appraisal

While the inspection informs you about the home's current condition, an appraisal determines its value. According to Bankrate:

“When buying or selling a home, an appraisal verifies that the sale price of the home is in line with fair market value. This ensures the homebuyer doesn’t pay more than the home is worth, and the mortgage lender doesn’t lend more than it is worth.”

Regardless of what you're willing to pay for a house, if you're using a mortgage to finance your purchase, the appraisal protects you from overpaying and the bank from lending more than the home's worth. If there's any confusion or discrepancy between the appraisal and the contract price, your trusted real estate professional will assist you in navigating any additional negotiations to close the gap.

Bottom Line

The inspection and the appraisal are different but equally important steps when buying a home – and you don’t need to manage them by yourself. Let’s connect today so you have expert guidance from start to finish.