Appraisals vs. inspections

(North Dakota Today) - While appraisals and inspections may seem like the same thing, appraisals and inspections serve two very different purposes.

One of the biggest differences is that a home a home inspection is optional, while an appraisal is always going to be required by the mortgage lender. An appraisal is not required if someone is paying cash for a home, but since most buyers do not have the ability to do that, there will be an appraisal happening on the majority of sales. An appraiser is more concerned with the value of the property, while a home inspector is more concerned with the condition of the property.

The party buying the home has the option to obtain a home inspection, so it is then up to that buyer to choose which inspector they would like to take a look at the home. That inspector is then working solely for the best interest of that buyer. An appraiser actually works for the mortgage lender, although the cost of the appraisal is then passed onto the buyer.

While they are both going to look at the general condition of the property, they serve very different purposes. The home inspector is going to go in depth and take a look at the heating system, cooling system, mechanical systems, electrical panel, plumbing, foundation, shingles, and everything in between.

It’s the inspector’s job to give the buyer a full picture of the home and point out any concerns that could end up being large repair items or safety concerns for the buyer. The inspector cannot require that any repairs made, but the buyer and seller can negotiate repairs if there are items that come up during the inspection.

An appraiser’s job, on the other hand, is to primarily to place a value on the property. The lender wants to make sure that they are not lending more money than what the property is worth. So an appraiser is going to take a look at comparable homes that have sold in the area recently and compare the property to this in order to come up with a good value for the property.

In addition to assigning a value, the appraiser’s job is also to make sure that the home is a sound investment for the lender, and this is where the inspector’s findings can overlap with the appraisal. If there are major repairs needed or items that pose a safety risk, the appraiser can actually require that they be corrected prior to closing.

Common items that are flagged include peeling paint, broken windows, shingles that need replacing, and open electrical junctions or boxes. For any government insured loans, such as FHA, VA, and USDA, there will be stricter condition requirements than there is for a privately insured, or conventional, mortgage.

The cost varies for both services, but a home inspection is going to start at around $350 and can go up depending on the size of the house and if you order additional tests, such as radon. Appraisals range in price from around $550 on the lower end to $800 on the higher end. The buyer pays for the home inspection at the time that the inspection happens, while the cost of the appraisal is typically added into the buyer’s closing costs and paid on the day of closing.

For more information you can visit