Home Inspection vs. Appraisal: What Is the Difference?

Home inspections and appraisals are both professional evaluations of a property, but they serve entirely different purposes. An inspection protects the buyer by evaluating condition. An appraisal protects the lender by confirming value.

Home Inspection

A home inspection is an evaluation of the property's physical condition — structure, roof, electrical, plumbing, HVAC, and appliances. The inspector identifies defects, safety issues, and needed repairs.

• •Who orders it: the buyer
• •Who benefits: the buyer
• •Cost: $300 to $500
• •When: after offer acceptance, during the inspection contingency period
• •Result: a report identifying issues, which can be used to negotiate repairs or price

Home Appraisal

An appraisal is a professional assessment of the property's market value. The lender orders it to ensure they are not lending more than the home is worth.

• •Who orders it: the lender (buyer pays for it)
• •Who benefits: the lender
• •Cost: $300 to $600
• •When: during underwriting, after the inspection
• •Result: a value report. If the value comes in below the purchase price, you must make up the difference, renegotiate, or walk away

Do You Need Both?

Yes. The inspection tells you if the home is in good condition. The appraisal tells you if the price is fair. Skipping the inspection to save $400 can cost you tens of thousands in unexpected repairs.

Key Takeaways

• •An inspection evaluates condition and protects the buyer
• •An appraisal evaluates value and protects the lender
• •The buyer pays for both but they serve different parties
• •Never waive the inspection contingency unless you are fully prepared for the risk