Understanding the differences and why both matter
Many homebuyers and sellers confuse appraisals with home inspections, but they serve distinctly different purposes in a real estate transaction. While both involve examining a property, the goals, scope, and outcomes are fundamentally different.
Understanding these differences helps you know what to expect from each process and why both are typically necessary when buying or selling a home.
Determine market value for lending purposes
Licensed/Certified Appraiser
Lender (required for mortgage)
Market value and comparable sales
$500 - $2,000+ (varies by property)
30-60 minutes on-site
Evaluate property condition and identify defects
Licensed Home Inspector
Buyer (optional but recommended)
Structural integrity and system functionality
$400 - $800+ (varies by property)
2-4 hours on-site
An appraisal is an unbiased professional opinion of a property's market value. The appraiser's job is to determine what a willing buyer would likely pay a willing seller in the current market.
A home inspection is a thorough examination of a property's physical condition and systems. The inspector's job is to identify existing and potential problems that could affect safety, functionality, or require future repairs.
| Aspect | Appraisal | Home Inspection |
|---|---|---|
| Objective | Determine market value | Assess physical condition |
| Required By | Lender (mandatory) | Buyer (optional) |
| Depth of Examination | Visual overview | Detailed investigation |
| Testing | None | Systems, outlets, appliances |
| Comparable Analysis | Yes, extensive | No |
| Repair Recommendations | Only if affecting value | Detailed list provided |
| Report Delivered To | Lender (copy to buyer) | Buyer directly |
| Can Affect Transaction | Yes, determines loan amount | Yes, buyer may request repairs |
In most real estate transactions, you'll need both an appraisal and a home inspection because they serve complementary purposes:
It ensures the bank isn't lending more money than the property is worth. If the appraisal comes in below the purchase price, you'll need to renegotiate, bring more cash, or walk away.
It reveals the property's condition and potential problems. This information helps you make an informed decision and negotiate repairs or price adjustments before closing.
A property can appraise at full value while having significant defects that would be revealed in a home inspection. Never skip the inspection thinking the appraisal covers condition assessment—it doesn't.
Contract includes inspection and appraisal contingencies
Buyer schedules and pays for inspection; receives detailed report
Lender orders appraisal once loan application is complete
Based on inspection, buyer may request repairs or credits
Appraisal report delivered; confirms value for loan approval
Loan approved based on appraisal; transaction closes
Reality: Appraisers perform visual assessments only. They don't test systems, move furniture, or conduct invasive examinations. That's the inspector's job.
Reality: A property can have significant hidden defects while still appraising at market value. Always get an inspection.
Reality: Appraisers typically work independently and don't see inspection reports unless specific issues are disclosed.
Reality: Lenders require appraisals by licensed appraisers. Inspections cannot substitute for appraisals.
Appraisals tell you what a property is worth in the current market.
Inspections tell you what condition the property is in and what it might cost to maintain.
For a complete picture when buying a home, you need both. The appraisal protects your lender's investment, while the inspection protects yours.
Get an accurate, unbiased property valuation from certified Bay Area experts