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In the housing market, both home appraisals and home inspections make a big difference in whether a home sells well. It can also make the difference for any potential home buyer in making their purchase. That said, many home buyers or sellers, or those new to the housing market, may get appraisals and inspections mixed up. While they have many similarities, they do function in different ways.

Appraisals tend to focus on the worth of the home. A bank or lender may require an appraisal to determine how much the home is worth, or how much it should be purchased for. Appraisals are there to protect the lender and the buyer from paying more than the house is worth. An appraiser will look at the interior and exterior of the home for any significant damage or improvements made by the current home owner, such as a new deck or an old roof. An appraiser will be looking at the monetary worth of these improvements or deficiencies. Appraisals will analyze the most visible changes to a home and help a buyer or lender determine how to price the home.

On the other hand, an inspection is more focused on the actual nuts and bolts of the house. Inspectors will delve more deeply into the interior of the home, checking electrical, plumbing, and HVAC systems for any irregularities or damage. An inspectors purpose is to let a potential buyer know of any future expenses or hazards associated with a home, such as the need for a new furnace or rewiring that may need to be done. Though the inspection is not used for determining a home’s worth, it can be a useful tool for a buyer looking to put in an offer, and may determine what the lender will need to repair before the home is sold.

Both appraisals and inspections are an integral part of the home buying process, and both involve a licensed professional who will be examining the home and providing reports. In this way, they are very similar, though  about certain issues.