Once you’ve had an offer accepted on a home, a new process begins before the keys are officially handed over. Two of the most informative and essential steps of that process are the home appraisal and the home inspection.

But do you really need both? Surely one or the other is sufficient, right? Wrong! You want as much information as possible on the home you’re about to purchase, and your lender will want both steps to be completed before they fully approve the mortgage loan.

What’s the Difference Between a Home Appraisal and an Inspection?

A home appraisal is conducted by an unbiased third-party company that evaluates the home and determines its value. It takes into account factors such as the age, size, condition, and location of the house. The appraisal is arranged by the mortgage lender and paid for by the buyer at the time of the closing.

A home inspection is a thorough report completed by a third-party professional, documenting any potential concerns or issues with aspects such as the home’s structural integrity, wiring, plumbing, and other key components. The home inspection is arranged by and paid for by the home buyer.

Why Do I Need Both the Appraisal and the Inspection?

Mortgage lenders require appraisals to make sure the home is worth what the buyer is paying. For example, if a buyer comes to Gershman Mortgage asking for a loan of $100,000, we want to make sure that the home they are trying to purchase is actually worth $100,000. If it is, the loan process can proceed smoothly. However, if the appraiser returns and says the house in question is only worth $80,000, it raises several questions (i.e., would the buyer like to pay the difference between the loan amount and the appraisal amount, or would they like to back out of the contract?)

You need (and want!) the home inspection to protect yourself and this significant financial obligation you’re about to undertake, and you want to be as thorough and detailed as possible. If there are any problems with the home structure itself or the land it’s on, it’s crucial to know about them before you sign any closing documents. If major issues are found, you’ll be presented with a few options, depending on the contract you signed when your bid was accepted.

What is a Home Appraisal? What Kind of Information Will the Appraisal Give Me?

The appraisal will tell you the following information about the house you’re buying:

• Real Estate taxes
• HOA fees
• Special assessments
• Legal description
• Neighborhood characteristics, boundaries, and description
• Dimensions
• Zoning classification, description, and compliance
• What kind of utilities the house has (electricity, gas, water, sewer)
• Flood zone information
• General description
• Foundation information
• Exterior general description and condition
• Interior general description and condition
• What kind of appliances are there
• Comparable properties in the area (what they sold for, date last sold, etc.)
  
  

What is a Home Inspection? What Kind of Information Will the Inspection Give Me?

The inspection will go into detail (with photos!) about the following areas of the house:

• Roofing (coverings, flashings, skylights, chimneys, roof penetrations, drainage systems)
• The exterior (wall cladding, flashing, trim, doors, windows, decks, balconies, stoops, steps, areaways, porches, patio/cover, applicable railings, vegetation, grading, drainage, driveways, patio floor, walkways, retaining walls, eaves, soffits, fascias, fences)
• Garage (ceilings, walls, floor, door(s), occupant door from garage to inside of the home, operators, windows)
• The interior (ceilings, walls, floors, steps, stairways, balconies, railings, counters, cabinets, doors, windows)
• Structural components (foundations, basements, crawlspaces, walls, columns, floors, ceilings, roof structure, attic)
• Plumbing system (plumbing drain, waste, vent systems, water supply, distribution systems, fixtures, hot water systems, controls, chimneys, flues, vents, main water shut-off device, fuel storage and distribution systems, main fuel shut-off device, sump pump)
• Electrical system (service entrance conductors, service and grounding equipment, panels, branch circuit conductors, overcurrent devices, connected devices and fixtures, polarity and grounding receptacles, operation of GFCI, location of main and distribution panels, smoke detectors, carbon monoxide detectors)
• Heating/central air conditioning (heating equipment, normal operating controls, automatic safety controls, distribution systems, presence of installed heat source in each room, chimneys, flues, vents, solid fuel heating devices, gas fire logs and fireplaces, cooling and air handler equipment, normal operating controls, presence of installed cooling source in each room)
• Insulation and ventilation (insulation in attic, insulation under floor system, ventilation of attic and foundation areas, venting systems, ventilation fans, and thermostatic controls in the attic)
• Built-in kitchen appliances (dishwasher, ranges/ovens/cooktops, range hood, trash compactor, food waste disposer, microwave cooking agent, refrigerator)
  
  

As you can see above, there is a significant amount of information in the appraisal that isn’t included in the inspection, and vice versa! In recent years, homebuyers have been waiving their right to have an inspection contingency included in their contract, meaning that if the inspection came back riddled with issues, the buyer would have no chance to back out of the purchase. In even more extreme cases, buyers have been waiving their right to an inspection at all. The buyers in these scenarios believe this will make their offers more appealing to the seller, resulting in their offer being accepted.

We can’t stress enough the importance of having both reports completed for the home you’re about to purchase. Even if you’re paying all cash for the house, and no lender is requiring the appraisal, it’s worth having one done to ensure you’re not overpaying. Skipping either one of these could lead to unnecessary stress and heartache in the future.

Talk to a Loan Officer & Make Confident Moves with the Right Info

Would you like more information about the differences between appraisals and inspections? Contact a Gershman Loan Officer today, and they’ll walk you through both processes and explain why they’re crucial to the home purchasing process.

About Gershman Mortgage:
Communities, families, and homes are at the heart of what we do at Gershman Mortgage. Our founding principles are based on the core values of honesty, integrity, the entrepreneurial spirit, and putting our customers first. We are passionate and committed to customer service and strive to ensure that we exceed the expectations of our customers. We are a customer-centric company devoted to creating and maintaining long-lasting relationships.

NMLS #138063 16253 Swingley Ridge Road, Suite 200, Chesterfield, MO 63017 (800) 457-2357 Equal Housing Lender. Serving Borrowers in: Alabama, Arkansas, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Wisconsin

Written by Alli Wideman 05/14/2025 for Gershman Mortgage