What is the difference between an appraisal and a home inspection?

Buying a home has many steps, and sometimes the process can be confusing.

Two potential steps in a real estate contract can be an appraisal and a home inspection. (Both an appraisal and a home inspection are addressed in a real estate contract in Maryland.)

An appraisal is usually for a buyer’s bank. It customarily involves an independent appraiser visiting the house to determine monetary value along with general safety of the home. The appraiser’s job is to demonstrate to the bank that the sales price of the house is a correct value, that the bank is backing a house that is currently worth the amount the buyer is paying for it. Depending on the loan type, the appraiser may also have to note any items that they find to be unsafe about the house. For example, are there railings for the stairwells? Is there peeling paint on a home built before 1978? Does the house foundation have very large cracks?

If an appraiser finds items about the house that they deem unsafe, the appraisal value report can potentially have a caveat about the value – like, if this item is fixed, then the value is $XX. Should an appraiser report unsafe detail(s) about the home in the appraisal report, the loan’s underwriter may possibly determine that the bank will not lend money to the buyer unless that unsafe item is addressed.

How unsafe item(s) in the appraisal report could be handled may depend on what is written in the agreed contract of sale. Each contract of sale may have different terms regarding the appraisal.

What an appraisal is NOT, is a home inspection. A home inspection is completely separate with a separate professional.

A home inspection may or may not be part of a particular contract of sale in Maryland. Each contract of sale has different terms, and a home/property inspection is potentially one of those terms.

A home inspection in Maryland is usually a visual inspection of a home by a licensed home inspector. A home inspector is hired to look at the home and determine if there are any potential issues with the home. The inspector may note small and large items. They usually check the major systems of the house, though if the temperature outside is very cold, they may not be able to turn on any air conditioning to test it. The inspector usually looks at the foundation, the basement, if there is one, and if they can, may go up to check the attic space. They look at the roof and may note how it looks, and often can help determine an approximate age. The inspector often opens windows, checks electrical outlets, and may run appliances that come with the sale of the home.

To learn more about buying a home in Timonium and what the potential parts of an offer or contract may entail, please contact me. I would love to help you buy or sell a home in Towson!