What is the difference between an appraisal and inspection?
Two key components to the home buying process are the appraisal and inspection. Many homebuyers confuse these two functions. Both play important roles. Let’s take a high level look at their differences.
An inspection at the highest level is an examination of a home’s condition-structure and components. The inspection is conducted a trained and certified inspector. The inspector will produce a detailed report which will help the homebuyer determine if they want to proceed with the sales contract. Their main goal is the report on the condition of the structure. The report will detail deficiencies, comment on internal pluming, HVAC, examine the structure of property, etc. Report can also comment on mold, pests, etc. Remember, an inspection is for your protection.
On the contrary, an appraisal is an independent evaluation of market value. It is conducted by a trained/licensed professional called an appraiser. This is a 3rd party that does not have any financial stake in the transaction. This function helps to determine market value by evaluating similar sales in an area during a specific timeframe. Report will also detail square footage, construction quality, etc. When a bank is involved they want to confirm that there is sufficient collateral to lend against.
Think value vs. protection!