What’s the Difference Between Home Inspections & Appraisals?

Hammond Property Group Video Blog with Brian Hammond

Many homebuyers don't understand the difference between home inspections and appraisals. Today I’m here to explain the difference.

What's the difference between a home inspection and an appraisal? Many potential homeowners get the two confused, not realizing that there is actually a big difference between them. The truth is, the two processes are done for very different reasons.

First, we’ll discuss the appraisal. The primary purpose of an appraisal is to determine the value of a property. This is set in place to protect the lender. If the lender is going to originate a loan on a specific property and hold it as collateral, they want to know the reasonable value of the property in the current market.

The truth is, the two processes are done for very different reasons.

An appraiser is hired by the bank to visit the property and take note of the condition. They’ll then compare the property with other homes that have sold in the area with similar square footage and features. Ultimately, this is all done to assign the property a fair market value and protect the lender.

Home inspections however, are for the benefit of the homebuyer. The buyer will hire a licensed inspector to examine and determine the condition of the property. A general inspector will check out the roof, the structure, the electrical components, and the plumbing to name a few things. This gives the future homeowner a clear picture of the condition of the home, preparing them for any potential future maintenance.

If you have any questions about these two real estate processes, please feel free to give me a call or send me an email. I look forward to hearing from you!