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Appraisal or Inspection—Which Comes First When Buying a Home?

An older couple gardens while reminiscing about if their appraisal or inspection came first when they purchased their first home.

Knowing everything about a home before you buy it is critical to ensure you’re protected. The last thing you want to do is buy a property only to find out it’s riddled with problems, or even worse, it’s not worth the money you paid for it. As such, appraisals and inspections both serve key roles in helping you make the right home-buying decision. However, there is often confusion about which should be done first.


This is why in this article, we’re clearing the air and answering the following:

  • Appraisal vs. inspection (what they are)
  • What type of appraisal and inspection will I need?
  • What to expect from an inspection?
  • What to expect from an appraisal?
  • Where do I find an appraisal and inspection?


Appraisal vs. Inspection


To better understand whether the appraisal or home inspection should come next during the home-buying process, it’s first important to know what they are.


An appraisal is a formal opinion of the value of a home, completed by a third-party individual called an appraiser. During an appraisal, the appraiser inspects the property’s size, amenities, upgrades, location, necessary repairs, as well as the local housing market and what other homes in the area are selling for. Using complex formulas, appraisers then use this information to derive the appraised value of a home, which is shared with both the buyer and seller in a report. An appraisal is often a requirement imposed by lenders to ensure the mortgage does not exceed the home’s value.


On the other hand, a home inspection is an opinion of a property’s condition and includes recommendations on what repairs may need to be done. It involves a home inspector conducting a thorough visual examination of the property’s foundation, basement, attic, roof, electrical panel and more. The inspector’s findings are then compiled into a report, which is shared with both the buyer and seller and can then be used to aid in the negotiation of the sale.


The key difference between an appraisal and inspection is that the client for the former is actually the bank or lender, while the client of a home inspection is the home buyer themselves.


What Type of Appraisal and Inspection Will I Need?

The type of appraisal and inspection you will need when buying a home will largely depend on the type of home you’re buying. In general, there are three types of appraisals. Those created using either the cost, sales comparison, or income capitalization approach. If you’re buying a standard single-family home, most likely your lender will order a sales comparison appraisal, which will use local home sales to calculate your home’s value. However, if the property is unique, such as a farm or converted fire station, then your lender may order an appraisal using the cost approach. Likewise, if you’re planning to purchase a multifamily property where you will be living in one of the residential units, then an income capitalization appraisal might be needed.


As far as the type of inspection you will need, this will largely depend on the age, size, structure and condition of the property you are buying. Typically, buyers should order a general home inspection first, and once the inspector completes their initial investigation, they may recommend additional inspections, such as a wood-destroying pest inspection, a foundation inspection, a mold inspection and more. Again, unlike an appraisal ordered by a lender, you as the buyer have greater freedom in terms of what types of secondary inspections you can order.


What To Expect From an Inspection?


When getting an inspection done, there are certain things you can expect. First, expect your home inspection to take at least two hours to complete, depending on the size of the house. Remember, the inspector will be looking at everything in the home, including the roof, walls, plumbing, electrical wiring, appliances, etc. Fortunately, though, once the inspection is completed, you’ll usually get the report within the next 1-2 business days. In terms of cost, expect your general home inspection, as well as any additional inspections, to be anywhere between $150 to $350. As the buyer, you will be the one paying for the inspection.


What To Expect From an Appraisal?


When it comes to an appraisal, there are different things that a buyer can expect. First, the appraiser’s physical evaluation of the property will take less time, usually only 15 to 30 minutes. Most of the appraiser’s work is heavily computer and research based. Because of this, the second thing you can expect is to receive your copy of the appraisal anywhere from 5 to 30 business days after it’s done. Third, you can expect an appraisal to cost anywhere between $400 and 600, depending on the type the lender requests. Because you will be paying for the appraisal, even though it’s the lender requesting it, make sure to ask them ahead of time for a cost estimate.


Where Do I Find an Appraisal and Inspection?


As a buyer, you can find your copy of the appraisal report by requesting it either from your lender directly or from your realtor. It will not automatically be delivered to you once it is done. However, you can request the inspection report directly from the home inspector, who can deliver it to you electronically.


Bottom Line: The Inspection Comes First

While both an appraisal and inspection are critical, given that a home inspection is done for the benefit of the buyer, not the lender, takes less turnaround time, is less expensive and is more thorough, as a buyer it should be ordered first. By getting your inspection done before your appraisal, you save yourself a lot of time and money. More importantly, though, you buy yourself greater peace of mind that the house you’re making an offer on is the right choice.