Know the difference! Inspections and appraisals might seem similar, but they play very different roles in the home closing process.
An appraisal determines the fair market value of the home. An appraiser will walk through the property and take a general assessment of the home. They then use their report and comparable sales to determine the property’s fair market value. Lenders require appraisals to make sure that the home is worth the mortgage amount. They don’t want to lend money on something worth less than the mortgage.
An inspection is an in-depth look through the home to determine its condition. An inspector will go through the house, test all of the major home systems and then create a report with recommendations on repairs and concerns.
If you’re buying with cash, you don’t have to do either. But it’s still worth the time and money to get them done to make sure that you’re putting your money into a safe investment.