Quick answer: A home inspection tells you what's wrong with the house. A home appraisal tells you what the house is worth. Different professionals, different reports, different purposes — and you almost always need both. Here's exactly how they differ.
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| Home Inspection | Home Appraisal | |
|---|---|---|
| Purpose | Evaluate the home's condition | Determine the home's market value |
| Who orders | Buyer (you) | Lender |
| Who pays | Buyer (paid at inspection) | Buyer (often through closing) |
| Required? | No (but always recommended) | Yes (for most mortgages) |
| Time on-site | 2.5 – 4 hours | 30 – 60 minutes |
| What's checked | 120 systems & components | Visual walkthrough, comparable sales |
| Report length | 30-80 pages with photos | 5-10 pages, mostly comparable sales |
| Who picks them | Buyer chooses | Lender assigns (federal rule) |
| Can negotiate from? | Yes — major leverage | Sometimes — if low |
What a home inspector actually does
A licensed home inspector spends 2.5-4 hours on-site evaluating every system in the home — roof, attic, foundation, electrical, plumbing, HVAC, exterior, interior, and built-in appliances. The output is a 30-80 page digital report with photos and prioritized findings. Full inspection scope here.
The inspector's job is to find what's wrong. Their report becomes your negotiating leverage with the seller.
What an appraiser actually does
A state-licensed appraiser spends 30-60 minutes at the home doing a visual walkthrough, then several hours offsite analyzing recent comparable sales ("comps") in the neighborhood. The output is a relatively short report assigning a market value to the home.
The appraiser's job is to confirm the home is worth what you're paying — for the lender's protection, not yours.
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Buyers sometimes ask: "If the appraiser is going to look at the home anyway, do I really need an inspection?" Yes. Here's why:
- Appraisers don't open electrical panels. Inspectors do.
- Appraisers don't crawl into attics. Inspectors do.
- Appraisers don't test outlets, run appliances, or evaluate HVAC age. Inspectors do.
- Appraisers don't walk roofs. Inspectors do.
- Appraisers don't tell you what to fix or negotiate. Inspectors do.
An appraisal answers "is this home worth $425,000?" An inspection answers "what's hiding in this home that I need to know about?" These are completely different questions.
The order they happen in
- You make an offer — accepted by seller
- Inspection contingency starts — you have 5-10 days to inspect
- Inspection happens — report typically next day
- You negotiate repairs/credits based on inspection findings
- Lender orders appraisal — usually after inspection contingency clears
- Appraisal happens — report in 1-2 weeks
- If appraisal comes in low, additional negotiation
- Closing
What happens if the appraisal comes in low
If the appraised value is below your contract price, your lender will only loan the appraised amount. Your options:
- Bring more cash to closing — make up the gap out of pocket
- Renegotiate price with the seller — ask them to drop to appraised value
- Dispute the appraisal — request a Reconsideration of Value with new comps
- Walk away — if you have an appraisal contingency in your purchase agreement (most MN buyers do)
Cost comparison
Appraisals in Minnesota typically cost $400-$600 (often rolled into closing costs). Home inspections vary by home size and add-ons — see our cost guide or use the instant estimator for your exact price.
Common confusion: "appraisal addendum"
Some buyers see appraisal-related contingencies in their purchase agreement and confuse them with inspection contingencies. They're separate:
- Inspection contingency — gives you the right to inspect and negotiate or walk based on condition
- Appraisal contingency — gives you the right to walk if appraised value comes in lower than contract price
Both are standard in MN purchase agreements. Neither is required. Always have both.
Bottom line
The inspection protects YOU. The appraisal protects your LENDER. You need both. The inspection is your call (always do one). The appraisal is your lender's call (and it'll happen automatically once you're under contract).
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