Why Do I Need An Appraisal And A Home Inspection?


One of the questions I receive often from homebuyers is about the need for a home inspection when the home is being inspected by an appraiser.  It’s a question that makes a lot of sense when you consider that both the appraisal and the home inspection are paid for by the buyer – and neither are inexpensive.

Appraisals are required by lenders to determine the value of the home that you have under contract.

All lenders, regardless of the loan program being used, will require an appraisal of your new home before giving you a loan commitment.   The lender wants to be sure that the property is worth at least the amount of the mortgage. 

To arrive at a value, appraisers compare your home to similar homes that have settled recently and are located nearby.  Adjustments are made based on the features and physical characteristics found in the other homes. 

In the case of government loans (VA, FHA, and USDA), the appraiser will also inspect for minimum property standards and certain health and safety items – as determined by the lender and the particular loan program.

For example, while inspecting the property, an FHA appraiser will look for missing handrails, evidence of water penetration in the basement, potential problems with the roof, chipping or peeling paint in homes built prior to 1979, loose boards on decks, sidewalk damage, and exposed electric wiring. 

While these matters are certainly important and potentially costly to fix, they would be revealed during a home inspection.   

So, the appraisal is intended to protect your lender by making sure that you don’t overpay for your home. 

Keep in mind, your buyer’s agent has access to the same sales data that appraisers use and has a responsibility to tell you how much the house is worth before submitting an offer.

Home inspections inform and educate buyers about the overall condition of the home they have under contract. Home inspectors do not determine value.

Home inspectors look closely at every visible aspect of a home including its roof, walls, windows, foundation, plumbing, electrical system, heating and air conditioning, and the condition of all appliances.

Home inspections are intended to identify major problems and to offer practical information about the property.   Good home inspectors take the time to offer valuable maintenance advice and how much to budget for repairs that will be needed in the future.

Home inspection reports are not “punch lists” like we see in new construction where every little detail should be perfect.  However, when a major problem is revealed, it then becomes part of the sales negotiation between you and the seller.

Normally, a home inspection takes several hours to complete depending on the size of the home.  I feel strongly that all buyers should attend along with their real estate agent.

An appraisal is not a substitute for a home inspection.

Obviously, this an oversimplified explanation of appraisals and home inspections.  Unless you are paying cash for your new home, you will have to pay for an appraisal because your lender will require it.  On the other hand, home inspections are optional, but every homebuyer should get one for peace of mind.  I doubt seriously that very many buyers would agree to an appraisal if it were an option.

Reach out if you have a question about buying a home or would like to learn more about the homebuying process.

I am a local real estate agent specializing in Harford County Homes, Havre de Grace Homes, and Cecil County Homes.

Ed Rybczynski

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