Two professionals assess the property before your loan closes. Most buyers confuse them. They do entirely different things, work for different people, and have different implications for your deal.
The Appraiser
The appraiser is ordered by your lender — not by you — to determine the fair market value of the property. The lender needs this to confirm they are not lending more than the home is worth. You pay for the appraisal (typically $400–$800) but the appraiser's client is the lender, not you.
The appraiser visits the property, measures it, assesses its condition, and compares it to recently sold similar homes (called "comps") in the area. Their report determines the appraised value, which becomes the ceiling on how much the lender will loan.
The Home Inspector
The home inspector is hired by you — the buyer. They physically examine the property and identify defects, safety issues, and items that need repair or monitoring. Unlike the appraiser, the inspector works for you and is on your side.
The lender does not require a home inspection (though FHA and VA loans have their own property standards that the appraiser notes). But skipping an inspection to save $400 on a $400,000 purchase is a significant mistake. A thorough inspector checks the foundation, roof, electrical systems, plumbing, HVAC, insulation, windows, and more.
The Key Difference
- Appraisal: Tells you what the home is worth. Done for the lender. Required for your loan. You pay but are not the client.
- Inspection: Tells you what is wrong with the home. Done for you. Not required by most lenders. You are the client — the inspector answers to you.
Using the Inspection Strategically
Inspection findings are negotiating leverage. If the inspector finds a failing HVAC system or a roof near end of life, you can request the seller repair it, reduce the price, or provide a credit at closing. A good buyer's agent knows how to use inspection findings without blowing up the deal unnecessarily.
FHA and VA appraisals include minimum property standards — the home must meet certain conditions. If it does not, the seller may need to make repairs before the loan can close. Ask your LO if this applies to your loan type.