Home Inspection vs. Appraisal

A home inspection and an appraisal are two completely different things. In simple terms, an inspector evaluates the condition of your home; an appraiser estimates the value of the home. Both are important because 1) you want to make sure the home you are buying is in good condition; and 2) you want to make sure you're not borrowing more than the home is worth.

During a home inspection, a qualified inspector takes an in-depth and impartial look at the property you plan to buy. The inspector will:

1. Evaluate the physical condition: the structure, construction and mechanical systems.
2. Identify items that should be repaired or replaced.
3. Estimate the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes.

If an inspector uncovers a problem above and beyond his/her expertise, they may recommend further testing or inspection. Being that a home is likely to be the largest single purchase an individual will make in a lifetime, Nothnagle agents will always recommend that you conduct a home inspection prior to purchase.

An appraiser will use various methods to estimate the value of the property you are purchasing. Lenders require an appraisal because they, like you, want to make sure the home is not being financed for more than it is actually worth. It needs to be "marketable."

Appraisers will compare the home to other similar homes in the area that sold within a specific time period. Similar to when an agent runs "comparables" of homes that sold or were recently listed when helping a seller properly price their home, an appraiser runs "comps" too.

For buyers who are getting an FHA mortgage, the appraisal process is slightly different. FHA requires a more visual inspection to meet FHA guidelines and requirements.

FHA appraisers are looking for conditions related to safety, security and soundness. There are certain defective conditions that an appraiser may find are required to be remedied or will require further inspection by a qualified expert, such as evidence of termites, inoperative plumbing/heating/electrical systems, leaking or worn out roof, cracked masonry or foundation damage and drainage problems. Cosmetic repairs are considered in the overall condition rating and valuation (i.e. worn carpet, crack in windowpane).

Again, even though an FHA appraisal looks at certain conditions it DOES NOT take the place of a professional home inspection. Costs add up when purchasing a home, however cutting back on spending a few hundred dollars on a professional inspection is not recommended when the lack of an inspection could cost thousands in repairs down the road.