Real Estate Appraiser vs. Home Inspector: What’s the difference?

appraisers vs home inspectors whats the differenceI sometimes find that people get the real estate appraiser and the home inspector confused so I thought I would share with you the differences between the two. Both are involved in real estate transactions but each in a different way. I know that both look like they may be doing the same thing when they are at your house snooping around looking into closets, attics, and crawlspaces but there are fundamental differences between the two. Generally speaking you can say that the appraiser is more concerned with the value of the property and the home inspector is more concerned with the condition of the property. Lets take a closer look at what each of these two professionals do. I have described what appraisers are concerned with and my friend Jim Waddell, who is a home inspector, contributed to that section.

Real Estate Appraiser- Real estate appraisers develop an opinion of value for the subject property for various reasons including mortgage underwriting. Some examples of this are: buyers purchasing a home, owners refinancing a home, and clients who are building a home. Other non traditional uses for an appraisal include valuation for insurance companies, helping sellers arrive at a market value to list their home, estate planning, and tax appeals. Each appraiser is different in the order that they do things but they all do the same thing, and I have included a brief list of what occurs during the appraisal inspection:

Exterior Inspection

  • Takes outside measurements of the house
  • Takes photographs of the outside of the house and any site improvements that add value
  • Notes property topography, drainage, boundaries, adjacent land uses, and potential hazardous conditions
  • Notes site improvements such as landscaping, driveways, pools, and workshops, etc.
  • Notes material and quality of construction for main residence and any detached building including siding, roofing, doors, windows, etc.
  • Notes any damage observed such as settlement, rotting wood, broken windows, curled roof shingles, and possible termite damage

Interior Inspection

  • Take interior photos of all rooms
  • Notes floor plan for placement of rooms and to determine if it flows well and has good functionality
  • Notes materials and quality of construction of the interior of the home
  • Notes kitchen improvements such as appliances, counter material, back splash type, and flow of the kitchen.
  • Notes bathrooms for any recent updating as well as quality and condition of improvements
  • Observes all rooms for potential problems such as water leaks, cracks and holes in walls, worn or damaged flooring
  • Observes and notes special features of the home such as home entertainment systems, security systems, fireplaces, etc.
  • Notes sizes and placement of bedrooms as well as if they have closets (some older homes may have bedrooms with no closets, however the appraiser will not consider it a bedroom without a closet and some rooms used for bedrooms may be too small for today’s standards and this could effect functionality)
  • Observes attics for type of access and adequacy of insulation
  • Observe adequacy of electrical, plumbing, HVAC and mechanical services

Home Inspector- Home Inspectors develop a recap or snapshot of the condition of the property mainly for buyers purchasing a home, but it is not limited to just buyers. Other users might be sellers, mortgage underwriting, banks, and contractors. Home inspections are normally regulated by the state. The state of Alabama is regulated by the Building Commission which enforces the standards set by the American Home Inspector Society (ASHI). A general list of components that should be inspected is below:

Structural

  • Walls, Floors, Columns, Piers, ceilings, roof structure – All things involving structural of the house
  • Water penetration found in basements, crawlspaces, and walls

Exterior

  • Walls, Doors, Windows, Garage door operators, Decks, Balconies, Stoops, Steps, Railings….
  • Vegetation, Grading, driveways, Walkways….
  • Eaves, Soffits, and Fascias

Roof

  • Roof coverings, Flashing, Skylights, Chimneys, and roof penetrations
  • Drainage systems – Gutters and downspouts

Plumbing

  • Interior drain, Waste, and venting systems
  • Interior water supplies, distribution system, and fixtures
  • Hot water systems
  • Shut off valves
  • Sump pumps

Electrical

  • Main entrance and distribution panels
  • Branch circuit conductors
  • Connected devices and fixtures
  • GFCI and AFCI receptacles
  • Smoke detectors
  • Location of panel boxes

Heating and Air Conditioning

  • Equipment
  • Operating controls
  • Safety Controls
  • Chimney, flue, and vents
  • Fireplaces
  • Presence of treated air in each room
  • Condensation lines

Interiors

  • Ceilings, Walls, Floors, Steps, Railings…
  • Counters and cabinets
  • Doors and windows

Insulation and Ventilation

  • Insulation and vapor retarders (in unfinished areas)
  • Ventilation of attics and foundation attics
  • Venting systems and fans

Built in Kitchen Appliances

  • Dishwashers, ovens, ranges, disposals, and microwaves

So as you can see the home inspector looks at more parts of the house and is more concerned with the condition and function of all of the systems of the house than the appraiser. The appraiser typically only makes a limited visual inspection of these items and will note if there are any obvious problems whereas the home inspector digs a lot deeper to make sure they are in good condition and functional. Because of this closer look at things within the house the home inspector usually takes more time at the house than the appraiser, however their job is mostly done when they are finished studying the house whereas the appraisers is just beginning. The appraiser is only collecting data about the house to be used in their future analysis. Most of their work is done back at the office where they are doing research and putting the report together.

I hope this clears up the difference between appraisers and home inspectors, however if it doesn’t you can leave me a message below. I look forward to connecting with you.

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Comments

  1. Gan Pillai says:

    Hello Tom,
    I would like to enter into either Home inspector or Home appraiser in Missouri area.
    Please help: Which one has more marketing opportunity or more demand in Missouri ?
    Which one pays more for the same hours put in.?
    I knew it is time consuming and expensive to get license for Appraiser.
    In MO, one does not need license to work as home inspector.
    Regards
    Gan

    • Thanks for your question. I live and work in Alabama so I am only familiar with our state. I am pretty sure that it does take more time to get fully licensed to do appraisal work compared to home inspectors. For appraisers, you have to take the coursework and get experience through working for another appraiser. This takes several years to complete before you can work for yourself. I would suggest you speak to an appraiser in Missouri to find their specific requirements. Good luck with whatever you decide to do.

  2. Great Article!
    As a Realtor I have buyers who think an Appraiser will be “inspecting” the home all the time it seems and that they wont’ need a home inspection. I do have a question for you. FHA loans and requirements for Smoke detectors and Carbon Monoxide detectors, if it’s not local code to have these items present for a home sale then FHA doesn’t require it, is this correct? IT maybe code for new construction or a remodel, but from what I’ve read I can’t see that Alabama requires an existing home to meet new construction code for a sales transaction to take place.

    Thanks!

    • Aaron, you are correct. FHA does not have any specific requirements for these items but the home should meet local code. Thanks for reading.

  3. Thank you Mr. Horn for clearing up the difference between the two. In the fall, I was going to go to school to become a Home Inspector. I was told that they are the same and that I would have to work for a bank or loan company to do inspections. But I think they are also confused. So my questions are, Does a Home Inspector have to work for a loan company or a bank? Can they have their own business? Does banks or loan companies require to use their own inspector?
    Thank you,

    • Thanks for the question Sherry. It sounds like there is confusion. Appraisers can and typically do work for banks, however they can also work for real estate agents, attorneys, accountants, and homeowners. Home inspectors typically don’t work for banks but rather for home buyers before they purchase the home. Home inspectors do not have to work for banks and mortgage companies and most that I know own their own company. Hope this helps.

  4. Thanks for this explanation. We are selling a home and the buyers waived home inspection. The appraiser viewed the property and is telling the bank we need to make all kinds of repairs and settlement can’t occur until he come back to inspect to be sure the work is done. Is this right?

    • That could very well be the case. Appraisers are required to report repair items and then the underwriter will determine if they need to be repaired before the closing.

  5. Can one person be certified to do home inspections and appraisals?

    • Yes David, I have heard of people doing both. One concern I’ve heard about this is that if you do an appraisal you are held to a higher standard regarding property condition and potential problems the house might have. As an appraiser we are required to report any negative condition which is visually noticeable, however because we are not an inspector we cannot be he held accountable for condition items that are not readily visible.

  6. Thanks for sharing this! I have been wondering whether to hire a real estate appraiser or a home inspection service before I list my home. Since I know how much my home should be worth, I think that finding a home inspection agency is a bit more pressing. It’s important that I am being honest when I tell people that my home is in great condition!

    • Thanks for sharing Delores. Just make sure that the sales you use to come up with a list price are the most recent and similar in square footage, condition, and features to your home, and that you know exactly what they sold for. Try not to go on what others tell you but try and verify the information. Good luck with everything!

  7. Hi Tom,

    Great article,very informative. I am looking to becoming self employed as either a Home Inspector, or Appraiser, problem is I can’t decide which one. I have an HVAC background, but I’m currently working behind a desk. I live in Chicago, Illinois and I’m considering taking the course soon. Any more suggestions you can pass along?
    Sincerely,
    R.W.

    • Thanks for your question Ron. Considering you have experience in HVAC, being a home inspector may be more similar than appraising since part of what you will be doing as an inspector will be checking out the condition and adequacy of the various systems in a house. Good luck with whatever you decide.

  8. Great post to highlight the differences. Many people confuse the two or think an appraiser is going to do everything a home inspector would do.

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