Home Inspection Vs Home Appraisal: Preparing For Home Ownership

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It is a common misconception for first time home buyers, or even home buyers who haven’t purchased in a while, to confuse their home inspection with their home appraisal. The assessments serve separate, but equally important roles in saving you money.

Home Inspection

In the beginning of the home buying process, once you have found a home and you are under contract, it is very important to get a home inspection done, so you are aware of necessary home repairs that could cost you money! The cost of the inspection does fall on the purchaser and can vary from $250 up to $400. You may be thinking that is quite a range, however, do keep in mind that the more expensive inspections typically come with bonuses such as pest/termite inspections as well!

The purpose of the home inspection is to determine if there are any issues with the home itself such as electrical, HVAC (commonly known as A/C), plumbing, or foundation. This inspection gives no indication to the value of the home, it is basically a checkup.

The home inspection should be performed within the first few days of the option period because if you determine that there is a major problem with the property, you can choose to walk away and get all of your earnest money back.

Home Appraisal

After the completed inspection, when your home is issued a clean bill of health, you are now ready to order your appraisal! Appraisal cost do depend on the loan, and occupancy type. For example, the cost of an FHA appraisal is around $585, where the cost of a conventional appraisal where purchaser plans to make the home a primary residence is $550! If one was planning to use a conventional loan but buy the property as an investment the price of the appraisal could be around $700.  The purpose of the appraisal is to determine the value of the home. Appraisers will take into account the land value, the square footage of the home, and the quality or grade of the interior in comparison to homes that have sold recently in that area of similar size and build.

The appraiser will also determine if the best use of the home is being met. For example, a home that looks like a fire station and is located in a commercial land tract may not be being used to the best of its ability as a residential home.

What’s Required?

In a home purchase, an appraisal is required, and a home inspection is not. However, in my book and I’m sure those in my field will agree, both are equally important and necessary!




Jamie Ayala

Jamie Ayala

Jamie Ayala has been working as a Loan Processor at Rock Mortgage for more than 4 years. As a knowledgeable account executive he has had many years of customer service experience in the loan, information technology, and political industries. Recognized for demonstrating a natural aptitude for working with cross-functional teams, as well as for meeting deadlines and validating loan documents, Jamie has a verifyable history of consistently exceeded sales and performance goals. His professional focal points include loan processing, client negotiations, team collaboration, and project management.