At a glance
The short answer
| Question | Home appraisal | Home inspection |
|---|---|---|
| What is its purpose? | To state an opinion of what the property is worth | To report the condition of the property |
| Who performs it? | A state-licensed or certified appraiser | A home inspector |
| Who orders it, and who pays? | The lender, owner, attorney or executor may order it, and payment is agreed in the engagement; on a mortgage the lender may order it and require the borrower to pay | The buyer usually arranges and pays for it, sometimes the seller |
| What licensing applies? | California appraiser licensing through the Bureau of Real Estate Appraisers | Ask the inspector what credentials apply |
| What is examined? | Features, condition and location compared with similar sales, with the extent of inspection set by the assignment | Roof, foundation, plumbing, electrical and other systems |
| What do you receive? | A written opinion of value with comparable sales | A condition report with findings |
| What is the effect on financing? | A lender relies on it to decide how much to lend, and it may note repairs a loan program requires | It informs repair requests or a decision to proceed and does not set the loan amount |
Why the difference matters
In a purchase, a buyer who relies on an appraisal to find defects will miss them, and a buyer who relies on an inspection to confirm price has no evidence of value. Each answers a separate decision. The Consumer Financial Protection Bureau describes an appraisal as an independent assessment of the value of the property, and says a lender may require one. An inspection is not a valuation.
How each affects financing
A lender relies on the appraisal to decide how much it will lend against the property. A low appraisal can change the loan or the price, and the Consumer Financial Protection Bureau says a buyer may consider renegotiating the price or reviewing the appraiser's work (the buyer's next steps are in why homebuyers need an appraisal). A bad inspection result can lead to repair requests or a decision to walk away. Findings about condition can also inform an appraisal, but there is no fixed automatic adjustment, because the effect depends on the property and on what similar homes sold for.
What an appraiser looks at during the visit
In Randy's published process the appraiser visits the property and notes the condition, upgrades, layout and site, because they affect value. Some mortgage programs allow other scopes, such as Fannie Mae's desktop appraisal, which does not require the appraiser to inspect in person. Either way, that is not a systems inspection. An appraiser is not testing the plumbing or the roof, and an appraisal is not a code-compliance certification. If you are concerned about condition, order an inspection too.
Which do you need, and when
- Buying a home: you will usually want an inspection for condition, and the lender will order an appraisal if you finance.
- Selling a home: an appraisal can document a value before you price. An inspection can reveal repairs before a buyer's inspection does.
- Estate or divorce: you need an appraisal for the date and the purpose. An inspection is a separate choice.
Neither replaces the other, so decide which question you are trying to answer first.
Where to learn more
For the definition and process, read what is a home appraisal and how a home appraisal works. For the buyer's side, read why homebuyers need an appraisal. To order, see residential appraisal in Los Angeles.
Frequently asked questions
Can an appraiser tell me if my roof needs replacing?
An appraiser notes visible condition because it affects value, but an appraisal is not an inspection of systems. Order an inspection for roof, plumbing or electrical questions.
Does a good inspection raise the appraised value?
Not automatically. An inspection reports condition, and the appraiser values the property from comparable sales and its features. Condition findings can inform the analysis, but there is no fixed uplift.
Should I order both when buying?
Many buyers do, because they answer different questions. The lender orders the appraisal if you finance.
Is an appraisal a code-compliance certificate?
No. It states a value and does not certify compliance with building codes.