Appraisals vs. Home Inspections

It’s time to cut through the misty fog of confusion that surrounds the practices of home inspections and appraisals. We love to do things like this because all things related to homebuying and selling make our hearts beat fast. Staying up late at night binge-watching HGTV is our one weakness, but figuring out how to help you is our strength. They’re related. It works out.

Both the appraisal and the home inspection are in place to protect the buyer and seller, but which comes first and why? Who pays for them? What can you expect as the outcome? Can you get tacos with that? Or fries?

We have the answers here. Take notes, or just keep reading, because the Internet is forever. Now then, introductions aside, let’s dig in.

The Appraisal

In most cases, the appraisal will come before the home inspection, but there are exceptions to every rule and this will be something you can work out with your agent and lender. An appraisal protects the lender and by default, you. They want to assess the value of the investment, the property, and whether or not the loan amount is in sync with other properties in the same area with similar size, condition, and features.

What Does It Look Like?

The appraiser walks through the property and takes notes on anything that could devalue the property or add value to it. 

One of the tools the appraiser uses is comparable sales, which are recent sales in the area—usually within a mile radius—with a similar number of bedrooms and bathrooms. These are used to find out what the market value is of a home like the one you’re buying or selling.

Not every appraisal happens when you’re buying a home. Some of them are instituted by the lender during a refinance. The same process is used to determine the value of the property, however, and could result in your refinance looking different than you expected.

The Home Inspection

Like the appraisal, a home inspection is something that can protect the buyer. Some states don’t require an inspection, but many agents will insist on their buyer getting one.

Handled in much the same way as the appraisal, by a professional—usually a former contractor or builder or another type of professional with certifications—the inspection is a more hands-on approach to determining what’s not quite up to the inspector’s standards.

The buyer is responsible for footing the bill and picking the home inspector. If you’re working with an agent, many will often have recommendations for home inspectors they’ve worked with and trust.

Sounds Expensive! But Should I Get One?

A house is a large beast, hiding many unseen things in its nooks and crannies, behind walls, in attics, and within the foundation.

There are many horror stories of people buying a house that they believed was their ultimate dream, only to have it immediately begin to fall apart. We’ve actually heard about a house with a missing foundation that was only evident due to a really thorough home inspection.

In truth, the inspection can’t forestall every major repair that a home will need, especially if it’s been around for a while. But a great professional will be able to tell you what repairs may be needed within in a year, which could help you plan for that proverbial rainy day, so you won’t be caught off guard when the water heater goes out.

This is the equivalent of kicking the tires on a used car or taking it to a mechanic to get a second opinion. The home inspector will look into things like the crawl space, any cracks in the foundation, the age of the windows and the roof. Like a clairvoyant oracle, they see meaning in what looks meaningless and are there for you to prevent you from making a major mistake.

If the Inspection Reveals Big Problems

This is the best part of all, if the inspection turns up major issues with your potential dream home, these can be used to negotiate for a lower price on the home. If nothing else, you can ask for repairs before closing. In this way, it’s entirely possible to get the cost of the actual inspection back in repairs or as a lower price for the home.

Of course, there are some problems that can completely ruin the homebuying process. In that case, count yourself lucky, if a bit sad, and keep looking. At least you’re not saddled with a home that requires $40,000 in repairs. Unless, that’s your gig—flipping houses. A very good gig.

Ultimately, there are many more details when it comes to the home inspection and the appraisal processes. That said, there’s nothing quite like a baptism by fire, and now you have the basics. You can head into this part of the gauntlet with the knowledge that you won’t be completely fleeced or ruined by some shocking surprise.


At Academy Mortgage, we create life-changing experiences through lending. CONTACT US today to explore your financing options.