If you’re planning to buy a home, an inspection is a key step in the process. It assesses the home’s condition before the transaction is finalized. This is different from an appraisal, which is a professional evaluation of the home’s market value. Typically, lenders require an appraisal to verify the home’s value before approving a loan.

Here’s a breakdown of each and why both matter when buying a home.

Home Inspection

Bankrate explains:

“In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.”

The home inspection evaluates the current condition and safety of the home. Issues like roof age, HVAC functionality, or structural concerns can be flagged. If concerns arise, buyers can negotiate repairs or pricing adjustments before closing. Your agent plays a vital role in navigating this process.

Home Appraisal

The National Association of Realtors (NAR) explains:

“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to the lender, who uses it to determine loan approval.”

Appraisals help ensure you’re not borrowing more than the home is worth. Even if you’re willing to pay a premium, the lender won’t approve a loan amount beyond the appraised value.

This is especially important in a sellers’ market, where bidding wars can push prices higher. Sellers may price homes aggressively, but lenders use appraisals to keep loan amounts aligned with actual value.

If the appraisal is lower than your offer, your agent can help renegotiate or strategize a new path forward.

Bottom Line

Both the home inspection and the appraisal are critical steps in the homebuying journey. You don’t have to navigate them alone—partner with a trusted real estate professional to guide you every step of the way.