What's The Difference Between an Inspection and an Appraisal

What is the difference between and inspection and an appraisal?

Appraisal vs Inspection: What’s the difference?

As a buyer, when you put in an offer on your Arlington Virginia home and the contract is ratified, there are two items that usually need immediate attention now that the escrow period has commenced.  One is a real estate appraisal of the property and the other is a home inspection of the property. To many homebuyers, an appraiser and an inspector may appear to be looking at the same areas of the home, and in a sense, seem to be doing the same job. However, an appraisal and a home inspection are two very different things.

Let’s take a look at each of these two processes and learn the differences. 

So what is an appraisal? 

The appraisal of a home is an assessment of the value of the property based on the attributes of the home itself and other market conditions in order to establish a fair market value.   

It is a very involved process carried out by licensed individuals who have gone through a rigorous training process, including an apprenticeship period as well. 

The appraiser will conduct an in-home visit to gather accurate information on the number of bedrooms and bathrooms, any property damage, the overall condition of the main structure and major systems, and will measure for accurate square footage, among other things.  They not only inspect inside the home and outside the home, but also the general area where the home is located and comparable values of other similar homes in the area. 

It is the lender from whom a buyer is seeking a mortgage (financing) for their Arlington Virginia home that they are buying who will request the appraisal.  

These appraisers are part of a pool of professionals identified by the State’s licensing body.  They are independent. (Prior to the last real estate meltdown, buyers themselves were responsible for getting appraisals).  The buyer is never present for this process. The appraiser, having received the details from the lender, will usually contact the home seller’s agent regarding access to the property.

Once the appraisal is completed, the document with the appraiser’s findings will be submitted by the appraiser to the lender.  The lender’s first interest will be the value of the home. The lender is interested in an amount equal to the purchase price of the property or more than the purchase price of the property, since the primary purpose is to assure the lender that the home’s value will cover the amount of the loan being requested by the buyer.

Should the value of the home as assessed by the appraiser be lower than the amount of the loan being requested by the buyer, the lender will notify the buyer.

At that time, based on the ratified contract, the buyer will have three options:

  1. Accept the lower appraised value and request the seller to lower the purchase price to match the appraised value
  2. Accept the lower appraised value without requesting the seller to lower the purchase price and agree to take the difference to the closing table (i.e. the difference between the purchase price and the appraised value).  Yes, market conditions can dictate this action at times.
  3. Reject the lower appraised value and walk away from the contract by voiding it.

Of note, it is a regular occurrence for cash purchasers to forego an appraisal.  I do not subscribe to that idea. I think one should be interested in the value of a home despite how it is going to be paid for.  And again, yes, market conditions can make this a strategy when submitting an offer.

In most instances, Item 1 is either accepted by the seller or negotiations result in both the buyer and seller splitting the difference.

What is a Home Inspection?

A home inspection, like the appraisal, is also initiated right after ratification of the contact.  This, however, is done by the buyer with the help of his or her agent. It also requires a Virginia- licensed professional for your Arlington VA home purchase.

The home inspector will come to the property and take an in-depth look at its integrity, condition, and functionality. It will usually start outside the home with a view of the roof, chimney, the slant of the land as it pertains to water intrusion, among other things.  Curb appeal is also noted. Some of the other areas that will come under scrutiny are -

  • Windows
  • Foundation
  • Plumbing
  • Landscaping drainage
  • HVAC (heating/cooling) systems
  • Electrical outlets and panels
  • Chimneys
  • Decks and patios
  • Built-in appliances
  • Floors and ceilings
  • Basements

The purpose of an inspection is to give the buyer a fair assessment of the condition of the property that they are in the process of purchasing.  Are there serious issues that would cause a prudent person to back away? Or are the inspector’s observation run of the mill issues that can be attended to easily without major expense?  Are the issues surrounding out-of-code matters which should be attended to by the seller? 


Tightening Radiator with WrenchEven if there is nothing of consequence, the home inspection is a very important step in the home-buying process.  It is a treasure-trove of information, especially for a first-time buyer. An inspector will point out where things are, e.g. water turn-off valves, electrical panels – which switch is controlling which items in the house, etc.  An engaged home buyer can gain a wealth of knowledge by attending a home inspection with a knowledgeable inspector.  

Do not think of skipping your home inspection.  Be there!

Once the physical inspection is completed, a very detailed inspection report will be prepared by the inspector and forwarded to the buyer, usually within a day as inspection time frames are tight.  The buyer and his or her agent will discuss and decide what course of action to take which could be –

  • Accept the report without asking the seller for anything.
  • Ask the seller to make certain repairs.
  • Ask the seller to provide a certain dollar value for you to make the repairs yourself.
  • Void the contract and walk away.

(A copy of the inspection would accompany the communication to the seller.)

In some situations, these negotiations can be time-consuming and stressful.  A good agent will have discussed a strategy for dealing with inspection issues in the initial consultation.

The bottom line is, an appraisal addresses the value of your Arlington Virginia home. An inspection, on the other hand, seeks to address the condition of the home and its fixtures.

It’s noteworthy to mention that both of these two items are time-sensitive, details of which will be in your contract.  Failure to adhere to the time frames will result in the loss of the contingency protections inherent in them. Your Arlington VA Realtor should be keeping track on your behalf.

For more information on buying or selling a home in Arlington, Virginia and all things about living in Arlington, VA please browse our website and contact Arlington Realtor Norma Skeete anytime. 

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