Home Inspection vs Appraisal Inspection

What is the difference between an appraisal inspection and a home inspection? Often buyers and sellers may mistake one for the other but they are in fact two very separate inspections with separate purposes.

Similarities:

• Performed by Licensed Professionals
• Involve a physical examination of the property
• Present a written report

Even though these two seem very similar they are very different in their purpose and function.

Home Inspection:

• Purpose is for buyers and sellers to be well informed about the condition of a home and the operational systems within it.
• A home inspector will physically inspect the home and report on it.

Per American Society of Home Inspectors:

“The standard home inspector’s report will cover the condition of the home’s heating system; central air conditioning system (temperature permitting); interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement and structural components.” 

• A home inspection is used by buyers or sellers to determine if there are any problems or potential hazards with a home that might require repair prior to a sales transaction.
• A home inspection can protect both buyers or sellers.
• A home inspection report do not include a market value.
• A home inspector is hired by a buyer or seller. Realtors can often recommend reliable home inspectors.

Appraisal Inspection:

• The purpose of appraisals are to determine market value of a property. Appraisals are typically ordered by a lender if a mortgage is to be involved in a sales transaction or refinance. Appraisals protect the lender from lending more than the home is worth and protects borrowers from overpaying for a property.
• The appraiser will inspect the property. Similar to a home inspector an appraiser will also inspect a home and observe the overall condition of the home, the heating/cooling systems, roof, attic, walls, ceilings, floors, appliances. Although an appraiser inspects these items for their general overall condition, an appraiser is not trained in determining the how the systems function and how they fail
• Appraisers determine the overall condition of a property and notes the features and then compares them to similar properties in the market in order to determine market value.
• Appraisers are hired by lending institutions to determine market value of the property. They are sometimes hired by sellers to perform pre-listing appraisals to know the market and aid in determining listing price.
• Sometimes the appraiser, especially an FHA appraiser, will determine repairs needed to bring a home to similar market condition or to meet minimum FHA standards. However, appraisers are not licensed inspectors and are limited in what they can determine in repairs. FHA appraisers are trained to inspector for only FHA minimum property requirements.
  

Question: “An appraiser inspected the property that I am purchasing and reported in to be in good condition, why would I also need a home inspection?”

Answer:

The appraisal inspection only reports what can be seen. An appraiser does not test for functionality of systems and cannot determine the potential hazards or malfunctions that a licensed home inspector can. A home inspection helps both buyers and sellers to make informed decisions. A home inspection can give a buyer or seller peace of mind in knowing that the property is in working order and posed no unknown hazards. Even though an appraisal inspection has been performed a home inspection is advisable for buyers and sellers to make informed decisions regarding a purchase transaction.

I hope this helps in explaining the difference in an appraisal inspection and a home inspection. Please let me know your thoughts or comments.

We hope this helps in explaining the difference in an appraisal inspection and a home inspection. Please let us know your thoughts or comments at www.dwslaterco.com 

Disclaimer: All information deemed reliable but not guaranteed. The information is meant entirely for educational purposes and casual reading only and is NOT intended for any other use.  This information is NOT intended to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or other potential real estate or non real estate purpose.  If you’d like to obtain additional information or order an appraisal for your specific needs, please contact us at www.dwslaterco.com. 

                                                                                                                                                                                                                                                         

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