It’s value vs. condition when deciding which you need
A home inspection determines a home’s exterior and interior condition.
Home inspections cost on average between $200–$500.
Home appraisals help to determine a property’s value.
On average, a home appraisal costs between $315–$420.
The home-buying process is full of so many little steps that it can get confusing at times. In particular, many home buyers and sellers can get tripped up when it comes to the difference between a home appraisal vs. an inspection.
Home inspections focus on the condition of everything in the home, while home appraisals focus more on the home’s value. Both play an important part in your home-buying journey, so we’ve further broken down the differences between them to help you go into each with confidence.
There are some similarities between home inspections and home appraisals, but these two parts of the closing process aren’t interchangeable. Both home inspections and appraisals play an integral part in the process that helps protect the buyer and the seller but there are some key differences between them.
With a home inspection, you’re gaining invaluable peace of mind knowing the property you’re buying (or selling) meets a passing grade. At the very least, the inspector can help identify major problems like a weak foundation, damaged roof, electrical and plumbing problems that require immediate attention, or minor issues like chipped paint or loose floorboards that aren’t cause for urgent action.
Meanwhile, for the seller, a home appraisal helps determine a realistic asking price, which can lead to a faster sale. For the buyer, an appraisal can protect you from paying too much for a home.
| Purpose | Who Pays | Average Cost |
|---|---|---|
| Inspection | Buyer | $200–$500 |
| Appraisal | Lender | $315–$420 |
A home inspection is essentially a checklist of what an inspector examines to ensure the house is in working order before you buy or sell it. Most buyers schedule a home inspection before they purchase a property to make sure they’ll be faced with no costly repair issues or red flags after they move in. A home inspector will go through major components, such as an HVAC system, and minor details, such as how easily a doorknob turns.
The buyer should be there during a home inspection so they can know upfront if there’s anything wrong with the home. If you’re the buyer, you’re likely the one who will want to hire a local home inspector, though you can try and negotiate this with the seller.
Sellers should be sure to tidy up beforehand, so the inspector has easy access to things like the basement, electrical panel, and attic.
A home inspection checklist focuses on these major areas:
Heating system: Heats to the desired temperature, no smoke, and energy usage is within standards
Central air system: Cools to the correct temperature and ventilation and energy usage are good
Interior plumbing: Toilets flush, faucets run, and the condition of the piping is acceptable
Electrical: Lights, appliances, and outlets all work, and the condition of the wiring is good
Roof: No leaks, missing shingles or pieces of the roof, mold, or pests
Attic and insulation: No noticeable damage to the structure of the attic and insulation is in working order
Walls and ceiling: No cracks, dents, or leaks
Floors: No chips, mold, or creaks
Windows: Proper sealing and each opens, closes, and locks
Doors: Each opens and closes, door knobs turn, and door frames are in good shape
Foundation: No signs of cracks or leaks
Basement (if applicable): No exposed wiring and no obvious damage to walls or stairs
Structural components: No signs of bowing in the walls or damage to the joists and studs
A home inspector will then look into smaller items such as loose flooring and even faucet pressure if need be. It’s not uncommon to see dozens of small items, so don’t fret if you see a long list.
When it comes to who pays for the home inspection, it’s generally the buyer who foots the bill. Most homebuyers interested in purchasing a house will want to hire a trusted home inspector to conduct a thorough interior and exterior inspection before they sign on the dotted line. A buyer can use any issues discovered in the home inspection report to negotiate a home price with the seller. Depending on the home’s size, location, and age, the average cost of a home inspection is between $200 to $500.
If a seller wants to ensure their house is in tip-top condition before they list, they can get a pre-list home inspection. Not only does this give the seller an idea of issues that might come up in the buyer’s home inspection report, but it also provides peace of mind that their home is in sound shape.
The decision on who pays for repairs will come down to a matter of negotiation. Any small problems like a squeaky door or a torn screen will generally fall to the buyer. They may want to make specific changes to these items anyway, so there’s no need to waste money. Big problems, such as a failing septic system or lead pipes, may come down to the seller. But this is on a case-by-case basis.
Some repairs are mandatory after a home inspection. State safety regulations and mortgage lenders set such repairs. For instance, updating plumbing to meet codes and installing or updating smoke alarms and carbon monoxide detectors are examples of repairs mandated by the government, depending on which state you live in. Mortgage lenders require fixes on issues like structural defects, pest infestations, contaminated water wells, and outdated or damaged HVAC systems.
A buyer may request that the problem be taken care of before they finalize the sale so that it falls to the seller to handle. Or a buyer may request that the repair cost be taken off the home's final price.
How long a home inspection takes depends on the square footage and ease of access to the areas. On average, home inspections typically last around three to four hours. Large houses may take all day, while small homes may only take an hour or two.
Most reports come in within 24 hours, but it could take as long as a week if the home inspector finds various problems. You might also have to wait longer if your area is having a surge in sales and the inspector is particularly busy.
A home appraisal focuses on things like curb appeal, home location, and the home’s functionality to determine a fair price. Lenders require an appraisal before they finalize a mortgage to ensure the financial institution is making a safe investment as well.
When it comes to the cost of a home appraisal and who pays for it, it depends on a couple of factors. Because lenders require an appraisal, they’ll either pay upfront fees when they hire a local property appraiser or move it into their closing costs. A buyer will pay for an appraisal if they are applying for a mortgage or want to know the current value of their home to refinance their mortgage. The average cost of a home appraisal is $355 and generally ranges from $315 to $420 depending on where you live.
Buyers and sellers don’t necessarily need to be present when an appraiser comes by, as they’re not looking into the smaller details like a home inspector would.
A home appraiser will look at a multitude of items that would affect the overall cost of the home. These items include:
Square footage: Generally, the more useable square footage in a home, the higher the appraisal number
Floor plan: How well that square footage is used, how many bathrooms, bedrooms, and other liveable space
Amenities: Items such as a deck, patio, or workshop tend to increase the estimated value
Luxury items: Outdoor kitchens, swimmings pools, and home theaters tend to give a large increase to the estimated value
Location: Proximity to schools, groceries, and any large metropolitan areas can increase home value
Curb appeal: Exterior paint, front-yard landscaping, condition of walls, windows, and doors that are seen from the curb can increase a home’s appeal
Roofing: Roofing material and condition can also affect a home’s value
A home appraiser may ask for a copy of the home inspection report to look into the home’s overall condition. If there are major items such as a leaking roof, broken HVAC system, or a failing electrical system, then this can be expected to decrease the overall value of the home. This is a case-by-case situation, though.
If an appraisal comes in far enough below the asking price, then the seller needs to make a decision. They can either lower the price to the appraisal point or within a reasonable amount or choose to maintain the price point and let the sale fall through.
While there are certain situations where you can inspect or appraise a home yourself, it’s rarely a good idea to do so. Whether you’re the buyer or the seller, it creates an ethical dilemma where either party could act in bad faith for the sake of making the best deal.
More commonly, you’ll find that the buyer skips the appraisal and inspection process when using cash rather than a mortgage.
Professional home inspectors and home appraisers have the qualifications and technical expertise required to conduct a thorough inspection or appraisal to pinpoint issues that you, as a layperson, might otherwise miss.
