What’s the difference between inspections and appraisals?

We are often asked by first-time home buyers,” What’s the difference between inspections and appraisals?”.  With both professionals taking a close look at the subject property, you would think that for around $400 they could do both jobs, right? Unfortunately, that’s not the case. In fact, home inspections are very different than appraisals in both the scope of their review, training, and experience.


A home inspection is performed to review the CONDITION of the home.  An inspection is typically ordered by the home buyer, however, sellers may choose to provide, depending on market conditions and the condition of the home. There are also some local cities that require a “Truth in Housing” inspection that is very basic in nature. This is much like the FHA inspection described below.

The very best inspections are performed by professional inspectors associated with organizations like “ASHI” (The American Society of Home Inspectors). In our opinion, they are worth their weight in gold and can be a great resource for understanding what you’re buying and how to operate the home as a system. We encourage all our clients to attend the full 3-hour inspection. If not, at least get a 1-hour overview following the inspection. You deserve to know what you are buying and to be informed about the potential issues that may arise while you own it.

That being said, we also know that anything can be fixed, changed out, or updated. The question is then, how much will it cost and who’s going to pay for it?


A home appraisal is looking at the VALUE of the home and ordered for a number of different reasons. These include refinance, purchase, foreclosure and other legal reasons due to divorce or estate issues, etc. When you are looking to purchase or refinance a home, it’s important you work with the lender to be sure the appraiser is approved through their institution.  In any of the other situations it is not as important but be sure to clear it with your attorney before you place the order.

The appraisal generally takes place in two separate phases. First, the appraiser will research the neighborhood using comparable sales data pulled from the Multiple Listing System we use as licensed real estate agents. They are looking for less than 3-month old sales of comparable age, style, size, and beds / baths typically in a 1 mile radius. Since we’re not appraisers, that’s about as technical as we are going to get. We would be happy to connect you to one for any specific questions you may have.

FHA Appraisals

There is an exception to every rule, right?.… well that’s the government side of mortgage lending. When a FHA appraisal is ordered, the provider has to be registered and approved to perform this type of appraisal. This is due to another condition the FHA requires above and beyond just finding that the sale price matches the value needed to satisfy the loan. They are also looking to be sure the home is in a “habitable” condition with basic health and safety conditions being met.  These include topics that are obvious like exposed electrical and hazardous plumbing as well as some not so obvious, like chipping or peeling paint on a structure built prior to 1978 due to the possible presence of lead-based paint and the hazards that may lead to.

Wrap up

We covered a lot of ground here, and there is certainly a difference between inspections and appraisals. This is one topic we don’t like to mince words on and hope you have a better understanding. Feel free to go back to the Frequently Asked Questions page and read up on some more topics or Contact Us if you are ready to get your search started and want to meet up for a one-on-one, hassle-free, no obligation home buyer consultation!


Back to FAQ page….