Inspection vs. Appraisal
Two of the most confusing terms in real estate. Let’s break down the difference so you know exactly what you’re paying for.
Home Inspection
Protects YOU (The Buyer)
What is it?
A deep-dive physical examination of the home’s condition. The inspector checks the roof, HVAC, plumbing, electrical, and foundation for hidden defects.
Is it required?
No, it is entirely optional (but highly recommended). The lender does not require this to approve your loan.
Who pays for it?
The buyer pays out of pocket, usually at the time the inspection is performed (roughly $400 – $600).
The Result
You get a detailed report of repairs needed. You can use this to renegotiate the price with the seller or ask them to fix the issues before closing.
Home Appraisal
Protects YOU and Required by Lender
What is it?
An objective calculation of the home’s financial market value. The appraiser compares the house to similar recently sold homes in the neighborhood.
Is it required?
Yes. The bank needs to ensure they aren’t lending you $400,000 for a house that is only worth $300,000.
Who pays for it?
The buyer pays for it, but it is usually handled through the lender and paid as part of your closing costs (roughly $500 – $700).
The Result
If it appraises at or above the purchase price, you are good to go. If it appraises low, the seller must drop the price, or you must cover the gap in cash.
The Short Version
The Inspection makes sure the house you’re buying is in a good condition.
The Appraisal makes sure you’re paying a fair market value for the home.