Appraisals vs. Home Inspections

As Michigan Mortgage Loan Officer Dave Lehner would say, “Don’t buy a money pit!”

What exactly does that mean?

Appraisals vs. Home Inspections imageAppraisals are required as past of the home-buying process. Home inspections are not, but they may be one of the most beneficial things you can do for your financial future. A home inspection will ensure that you don’t buy a money pit.

Here’s the difference between the two.


  • Required.
  • An appraiser provides a professional opinion of the home’s value. They do not analyze the “systems” of the home.
  • The goal is to make sure buyers are not overpaying for a home.
  • A home is appraised based on size, the number of bedrooms and bathrooms, functionality and recent sales of similar properties in the area.
  • The cost is typically between $400 and $575.

Home Inspections

  • Optional.
  • A home inspector will examine the physical structure as well as the “systems” of the house ranging from the foundation to the roof.
  • The home’s HVAC system, plumbing and electrical components, roof, attic, insulation, walls and ceilings, windows and doors, floors, foundation and basement will be assessed.
  • The home inspector is a licensed professional.
  • Buyers can use the inspection results to renegotiate the purchase price and request that the sellers make home improvements.
  • The cost is typically between $300 and $500.

As lenders, we’re responsible for ordering appraisals before proceeding to the closing table. We have no control over which appraiser is assigned to which home. The homebuyer is typically responsible for paying the appraisal fee.

Because the home inspection is not required, inspectors are hired by the homebuyer. We work with a pool of reliable experts and are happy to recommend one that will best meet your needs. The home inspector is working on the buyer’s behalf, so the cost is paid for by the buyer.

If you have questions about appraisals or home inspections, don’t hesitate to reach out. We’re here to help in any way we can!

3 replies
  1. Bob
    Bob says:

    I didn’t know that appraisals were required where as home inspections weren’t. I want a home inspection done on a house I want to buy in Texas. I’ll have to consider getting an inspector to make sure that there are no exposed wires.

  2. Taylor Hicken
    Taylor Hicken says:

    I appreciated it when you shared that a home inspector will inspect the physical structure of the property ranging from the foundation to the roof. My friend just mentioned the other day that she is planning to buy a house for her family as they have been living in a rental property for quite some time and she wants to provide the best for her parents who have sacrificed a lot for her. I will suggest to her hiring a reliable home inspector to examine the structure and system of the house in order to make sure that everything is in good condition.

  3. Kate Hansen
    Kate Hansen says:

    It’s good to know that you can negotiate a price with a home inspection service. My husband and I want to look into house hunting in a couple of weeks, and we were wondering what services we should hire that can help us. We’ll have to look into hiring a home inspection service that can help us while we go house hunting!


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