Inspection vs Appraisal
These are different evaluations serving different purposes.| Home Inspection | Appraisal | |
|---|---|---|
| Purpose | Assess condition | Determine value |
| Who orders | Buyer | Lender |
| Who pays | Buyer | Buyer |
| Required | No (but standard) | Yes (for mortgage) |
| Focus | Defects and safety | Market value |
| Timeline | 7-14 days after contract | 7-14 days after contract |
| Report use | Negotiation, decision-making | Loan approval |
Home Inspection
The home inspection evaluates the property’s physical condition. An inspector examines accessible areas and systems, documenting defects, safety concerns, and maintenance issues.Home Inspectors Overview
Complete guide to what inspectors do and their limitations
What Inspectors Evaluate
Structure and foundation
Structure and foundation
Foundation walls, floor framing, support beams, signs of settling or movement, structural integrity.
Roof and exterior
Roof and exterior
Roof covering condition, flashing, gutters, siding, windows, doors, grading and drainage around the foundation.
Electrical systems
Electrical systems
Service panel, wiring type and condition, outlets, switches, GFCI protection, safety concerns.
Plumbing
Plumbing
Water supply lines, drain lines, water heater, fixtures, water pressure, visible leaks.
HVAC
HVAC
Heating and cooling systems, ductwork, filters, thermostat operation, age and condition.
Interior
Interior
Walls, ceilings, floors, stairs, railings, windows, doors, built-in appliances.
Insulation and ventilation
Insulation and ventilation
Attic insulation, vapor barriers, ventilation in attic and crawl spaces.
Home inspections are visual examinations of accessible areas. Inspectors cannot see through walls, identify hidden defects, or predict future problems. They report what is visible on inspection day.
Specialty Inspections
General inspections don’t cover everything. Depending on the property, you may need additional specialty inspections.Radon testing
Radon testing
Tests for radioactive gas that can accumulate in basements. Common in many regions. Mitigation is straightforward if levels are high.
Termite/pest inspection
Termite/pest inspection
Identifies wood-destroying insects and damage. Often required by lenders. May be performed by general inspector or separate specialist.
Sewer line scope
Sewer line scope
Camera inspection of sewer line from house to street. Identifies breaks, root intrusion, bellies, or deterioration. Repairs can cost thousands.
Mold assessment
Mold assessment
If moisture issues are suspected or visible. Identifies mold presence and extent. May require remediation before closing.
Chimney inspection
Chimney inspection
For homes with fireplaces. Evaluates flue condition, liner, cap, and structural integrity.
Well and septic
Well and septic
For properties not on municipal water/sewer. Tests water quality and evaluates septic system function. Often required by lenders.
Pool and spa
Pool and spa
Evaluates equipment, surfaces, safety features, and structural condition of pools or spas.
Scheduling and Timing
Schedule your inspection immediately after your offer is accepted. Don’t wait. Why timing matters:- Inspection contingency is typically 7-14 days
- Inspectors may not have immediate availability
- You need time to review the report
- You need time to negotiate if issues are found
- Specialty inspections take additional time
Comparing Inspectors
Questions to ask and how to evaluate your options
What Happens After Inspection
The inspection report documents findings. You then decide how to proceed.Accept property as-is
Accept property as-is
Proceed without requesting changes. Appropriate when issues are minor or already reflected in price.
Request repairs
Request repairs
Ask seller to fix specific issues before closing. Common for safety issues, major system problems, and code violations.
Request credit
Request credit
Ask for price reduction or closing cost credit instead of repairs. Gives you control over how and when repairs are made.
Terminate
Terminate
Cancel the contract and receive earnest money back. Appropriate when issues are too significant or seller won’t negotiate.
- Agree to all requests
- Agree to some, decline others
- Offer credit instead of repairs
- Refuse all requests
After the Inspection
Detailed guide to negotiating repairs and credits
What to Negotiate
Focus negotiation on significant issues, not cosmetic concerns. Typically negotiated:- Safety hazards (electrical, structural, health)
- Major system problems (HVAC, plumbing, roof)
- Code violations
- Deferred maintenance with significant cost
- Issues affecting insurability or financing
- Cosmetic issues
- Normal wear and tear
- Minor maintenance items
- Personal preferences
Common Issues Found
What inspectors frequently discover and typical repair costs
Appraisal
The appraisal determines the property’s market value for the lender. This protects the lender by confirming the property is worth at least as much as the loan amount.Appraisers Overview
Understanding the appraisal process and what appraisers do
How Appraisals Work
Who orders it
Who orders it
The lender orders the appraisal and selects the appraiser. You cannot choose your own appraiser for a mortgage transaction.
What appraisers do
What appraisers do
Appraisers visit the property, measure and photograph it, note its condition and features, then research comparable sales to determine market value.
Timeline
Timeline
Typically 7-14 days from order to completed report. Scheduling, inspection, research, and report preparation all take time.
Cost
Cost
You pay for the appraisal as part of your loan costs. Typically 400-700 for standard residential properties.
When the Appraisal Comes in Low
If the appraisal is lower than the purchase price, there’s a gap between what you agreed to pay and what the lender will finance. Example:- Purchase price: 400,000
- Appraisal value: 380,000
- Gap: 20,000
Renegotiate purchase price
Renegotiate purchase price
Ask the seller to reduce the price to match appraised value. Sellers may agree to avoid losing the deal.
Pay the difference in cash
Pay the difference in cash
Bring additional funds to cover the gap. Requires available cash beyond your original down payment.
Split the difference
Split the difference
Negotiate with seller to meet somewhere in the middle. You bring some additional cash, seller reduces price.
Challenge the appraisal
Challenge the appraisal
Request reconsideration of value with additional comparable sales data. Not always successful.
Terminate
Terminate
If you have an appraisal contingency and cannot reach agreement, you can terminate and receive earnest money back.
Low Appraisals
Options when value comes in below expectations
If you waived the appraisal contingency, you must cover any gap with cash or lose your earnest money. This is why waiving appraisal contingency requires significant cash reserves.
Preparing for Due Diligence
Before your offer is accepted, have these ready: Inspector identified- Research and select an inspector in advance
- Confirm availability and scheduling process
- Know which specialty inspections you might need
- Know your inspection contingency deadline
- Know your financing contingency deadline
- Track dates from day one
- Provide signed contract immediately
- Respond quickly to documentation requests
- Appraisal is ordered after contract is received
- Know how much you have available
- Prepare for possible appraisal gap
- Budget for inspection costs
Learn More
Home Inspectors Overview
Understanding what inspectors do and their limitations
Types of Inspections
General and specialty inspections explained
Understanding the Report
Reading reports and interpreting findings
Comparing Inspectors
Questions to ask and evaluation criteria
Appraisers Overview
Understanding the appraisal process
The Appraisal Process
Step-by-step breakdown of how appraisals work
Understanding the Report
Reading and interpreting appraisal reports
Low Appraisals
Options when value comes in below expectations
Next: Title & Closing
The final steps before you own the property