The Inspectify Report

Home inspections versus appraisals: what you need to know

Nov 17, 2021 2:33:34 PM / by Joshua Jensen



Whether you’ve already had an offer accepted on a home or are just getting acquainted with the home buying process, it can be tough to keep up with the real estate terminology. Considering how big of a commitment buying a home is, it’s important to understand what everything means.

Home inspections and home appraisals are two important steps of buying a home. As a buyer, they are there to give you protection against overpaying for a property. In fact, many mortgage providers will require you to get one (or both) done before getting approved.


But what is the difference between an inspection and an appraisal? When do you need them, how much do they cost, and do they actually help you?


What is a home inspection?

Home inspections are a detailed examination of the condition of a home. The inspector, typically a certified professional, will look at the property’s structures and systems to determine their condition, and if they have any defects. 


The inspector looks at the exterior, foundation, roof, HVAC system, wiring, and more. Additionally, you might request ancillary services based on your region or if the inspector spotted something that needs to be looked at more thoroughly.


The goal of an inspection is to ensure that you are aware of the condition of the property. The inspector will usually categorize defects they find based on how severe they are. When getting an inspection through Inspectify, we provide you with free repair cost estimates for the entire report. 


This gives you the option to:

  1. Renegotiate the final closing price.
  2. Have sellers repair any issues before closing.
  3. Back out of the deal if an agreement can’t be reached.


Side note: if the seller does agree to repair the issues, be sure to have a re-inspection to ensure the issues are properly addressed.


Home inspections are not required by law but are often required in order to get approved for a mortgage. This is because the mortgage company wants to ensure the home is in good condition so that it can be used as collateral for the loan.


Other details

Home inspections typically cost $350-500 depending on the location. While that might seem like a lot, it’s important to always get an inspection before purchasing a home. 


While it might seem like just another expense you can avoid, inspections can often help you save money. On average, homebuyers save $14,000 using the results of their home inspection (based on initial offer versus closing price). 


Better yet, sometimes the sellers will perform an inspection before they list their home. The idea is to ensure both parties (buyer and seller) have complete information to negotiate a mutually beneficial price.


What is an appraisal?

An appraisal is used for evaluating the market value of a property. For the most part, all lenders require you to get an appraisal done. They want to make sure there isn’t a large discrepancy between the loan amount and the value of the property.


Lenders (usually) won’t loan you more than your new home is worth. That means if the appraisal discovers that the house is worth less than you offered, you will (likely) need to pay a larger down payment or renegotiate the closing price.


While that might be intimidating, it’s important to remember that appraisals help you as well. After all, do you really want to pay more than the home is worth?


Appraisers do a walk-through of the property, check beds and baths, square footage, improvements, and general property condition (but not detailed like in an inspection). They’ll also consider the neighborhood, nearby stores and schools, and prices of comparable properties.


Truthfully, the appraisal process is not very different from how you would evaluate if the property is worth the money. Current market trends are also an important factor.


So what’s the difference between a home inspection and appraisal?

Home inspections protect buyers by helping them understand the condition of the home. It ensures that buyers are aware of defects, so they don’t overpay or get caught with unexpected repairs. Home appraisals protect lenders from loaning money on a home for more than the property is worth. This protects them against losses in case the borrower (homebuyer) defaults on their loan.


Home inspections do not give any information as to the actual value of the home, only its condition. In fact, home inspectors aren’t even allowed to state the cost of repairs if there are defects (but they can provide estimates). 


Conversely, home appraisals don’t comment on the condition of the home. However, they do make sure there is nothing noticeable during the walk-through (such as a large hole in the wall, or collapsed roof).

While they are both forms of protection against making a bad investment, they protect different people (buyers and lenders respectively) in the real estate transaction.


Other details

Home appraisals are priced similarly to inspections, averaging $300-400. Unfortunately, even though lenders are the primary beneficiary of the appraisal, the buyer typically pays for it. 


How will a home appraisal benefit me?

While you might not like having to pay for an appraisal, there are some key benefits:


  • It helps you get the mortgage approval process moving
  • It ensures that you’re not going to be paying more than the house is worth
  • If the appraisal is less than expected, you can ask for the seller to lower the price
  • The appraisal will make sure that you will be paying the correct amount of property taxes


How will a home inspection benefit me?

  • It gives you peace of mind that you'll know what condition the home is in
  • The inspection report can be used to lower the final closing price or repair defects before closing
  • You can walk away with confidence if the sellers aren't willing to renegotiate
  • Pre-listing inspections provide transparency to speed up negotiations and closing.



A home appraisal should never be used as a substitute for a home inspection because the appraiser and inspector are both looking for different things. The appraiser is concerned with the value of the home, while the inspector is looking at the condition of the home.


Both services can work to protect you and your investment, so it is a good idea to get them done during the homebuying process. At Inspectify, we can take care of the home inspection side. Our easy online booking process lets you choose from thousands of highly qualified inspectors nationwide. We also provide you with free repair cost estimates for your inspection report, allowing you to renegotiate the final price with ease.


Ready to book an inspection? Click here to schedule in just a few minutes!


We hope this article helped explain the differences between home inspections and home appraisals, and we want to wish you every success with finding your new dream home!

Tags: Homeowners, Agents

Joshua Jensen

Written by Joshua Jensen