Usually, when we plan to buy a product or a property, we conduct different examinations of that product or property. For instance, if you want to buy a mobile, you will search for its features, working, for a better price elsewhere and reasonable for the price or not, etc.
All these steps come under two terms known as Inspection and appraisal. Both these terms are most frequently used in the real estate and renewed products market.
Inspection vs Appraisal
The difference between inspection and appraisal is that an appraisal is a process that works on the value of a product or property while an inspection is a process that works on the functionality of the property or product. It is important to perform both these checks, before buying and selling a property or a product(usually a renewed one).
Both these terms are frequently used in the real estate business. We perform both these tasks before we buy or sell a property, but we might not have come across these two terms.
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Inspection, the word itself directs us to the meaning of checking or scrutinizing something. We have a certified inspector to inspect the product or our property.
Inspection is a kind of scrutiny to evaluate the condition of the property, home, antique pieces, and machines too. Inspector visits and checks the property and gives a detailed overview of the property or product.
The appraisal is done after the inspection process and gives the value of the property or a product. There will be a few other quality checks in the appraisal process such as service capability and performance production.
An appraisal is performed by the trained inspectors and evaluates the market value of the property as the conclusion.
Comparison Table
| Parameters of Comparison | Inspection | Appraisal |
|---|---|---|
| Definition | Inspection is an organized process for the evaluation of the condition of a property. | An appraisal is a process through which the market value of the property is determined. |
| Outcomes | Report on working (if it’s a product) or condition(for the property). | Report on the price and performance conditions and some major criteria. |
| Order of occurrence | Inspection is done before the appraisal. | While the appraisal is done after the inspection. |
| Types | Visual inspection, remote inspection. | Property appraisal, product appraisal. |
| Performed by | Inspection is usually performed by qualified inspectors. | Appraisers perform the appraisal. |
What is Inspection?
Inspection is the process of examination of a property or a product that gives the condition or working and specifications overview. Inspection is carried out by a qualified inspector.
The inspection gives a detailed report of the property after an examination which helps the buyers to get an overview of the property without actually visiting the property or product. Usually, we come across these words in the real estate business.
For instance, if you want to sell your car through some x website. Usually certified websites accept the application of the machine after a series of tests that evaluate the condition, performance, and working of the car.
The same process of examination is done in the real estate market too. Before selling a property, an inspection is done for a property.
Inspection is the basic examination of the property, consider a home. The inspection reports on the condition of the house.
Inspection can also be stated as the pre-purchase activity performed by a licensed inspector to give out the report on the property. This process is deep which contains several parts in the examination.
If you consider a home inspection, an inspector invests multiple hours doing the comprehensive review on each segment house, right from materials used in construction to the painting of the house. Furniture, walls, doors, restrooms everything will be checked thoroughly.
What is Appraisal?
An appraisal is usually performed next to inspection. An appraisal is not that deep and concentrates more on evaluating the market value.
An appraiser not only checks the worth of the property but also compares the market value of the product with similar properties around it.
The appraisal can also be done without actually visiting the property, properties can be compared in the office, and market values can also be compared with the major features from the office itself.
An appraisal can be simply defined as the process of valuation of property, such as real estate property or an antique property. An appraisal is usually done by a certified examiner known as an appraiser.
An appraiser will have a designation from the regulatory authorities which governs the jurisdiction. Apart from real estate, this process is also used in taxation and insurance companies to know the real market value of the property.
For example, if one wants to sell his property, It undergoes the process of appraisal next to inspection. Appraisal of the property can be done either by visiting the property or in the office too.
An appraiser checks for all the features of the property at a glance and reviews the surrounding prices of the property and validates the price of the property, whether it’s a fair price or not. And hence he decides the price of the property considering the features and surrounding properties’ market value.
Main Differences Between Inspection and Appraisal
- Inspection is a deep examination of the property which gives out a thorough report on the condition of the property. While an appraisal is done to compare the market value and bring out a fair price of the property.
- Though both the processes take place in real estate business. Inspection is done by a licensed inspector and an appraisal is done by a authorized appraiser.
- Inspection mainly concentrates on the working and features of the property. In contrary appraisal concentrates on the fair market price of the property.
- Inspection is done by visiting the property and spending hours together on examination of property. Appraisal can be done from office too.
- Inspection is a dive into process than appraisal. As appraisal doesn’t require that deep examination of the property, it’s just a general assessment of home.
- https://link.springer.com/chapter/10.1007/11545156_19
- https://psycnet.apa.org/journals/apl/84/1/123.html?uid=1999-10108-010
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
