Home Inspections vs Home Appraisals – Understanding the Difference

If you are a first time homebuyer, be prepared to learn a lot of new lingo – fast! Two of the most commonly misused terms in the home buying and selling process are inspection and appraisal. A home inspection is not the same as a home appraisal, and you’ll need both.

The home appraisal assesses the market value of a home. Most lending institutions will require a current appraisal to complete a new loan or a refinance. The appraisal is all about what the home is worth, not about the features and the safety of the home. The appraisal serves to validate the price on the home, make sure the home is not over-insured and verify that it meets FHA property standards.

The home inspection is all about the condition of the home and is conducted by a qualified home inspector whose job is to determine that the structure of the house, from foundation to rafters, is sound and safe. Here are some of the features of the home that the inspector will examine to make sure the house is up to current code and safety standards:

• HVAC
• Interior plumbing
• Electrical systems
• Roof and attic
• Insulation
• Walls, ceilings, floors,
• Windows and doors
• Foundation and basement
• Other structural components

One you purchase your home, you may want to consider conducting a maintenance inspection every three to five years to look for problems or changes that could later turn into expensive repairs. You can find inspectors through the American Society of Home Inspectors (ASHI) or through your local home builders association. Whether you are buying, refinancing or maintaining your home, remember that appraisals are about value and inspections are about condition but both are important!