You find a home you love in Collierville and the paperwork starts flying. Two reports quickly rise to the top: the appraisal and the home inspection. They sound similar, but they serve very different purposes and follow different rules. When you understand each one, you can plan your offer, protect your budget, and move to closing with fewer surprises. Let’s dive in.
Appraisal vs. inspection: the basics
What an appraisal does
An appraisal is a valuation for your lender. A licensed or certified appraiser reviews recent comparable sales, your home’s features and condition, and local market trends to produce an opinion of market value. The lender uses that number to set loan terms and confirm the property is acceptable collateral. For certain loan types, like FHA or VA, the appraiser also checks for minimum property conditions that affect safety and marketability.
What a home inspection covers
A home inspection is your detailed look at the property’s condition. A professional inspector examines the visible structure, roof, electrical, plumbing, HVAC, and more to identify defects, safety hazards, and items near end-of-life. The inspector may suggest specialist evaluations, such as a structural engineer, HVAC technician, or pest control, for issues that need deeper review. You use the report for decisions and negotiations, not the lender.
The key difference
The appraisal is a value check for the lender. The inspection is a condition check for you. Both can affect your path to closing, but they answer different questions.
Who orders, who pays, and when in Collierville
- Appraisal: Your lender orders the appraisal, often through an appraisal management company to preserve independence. You, the borrower, typically pay the appraisal fee as part of loan costs.
- Inspection: You choose and hire the inspector. You pay for the general inspection and any optional tests like radon, sewer scope, or termite/wood-destroying organism (WDO) reports.
In most Collierville contracts, you schedule inspections right after your offer is accepted, during an inspection or due-diligence period. Many buyers negotiate 5 to 10 business days, though the exact length depends on your contract and market conditions. Lenders usually order the appraisal after loan application and initial underwriting steps, so it often occurs after your inspection period has started.
What each report includes
Inside an appraisal report
Expect an opinion of market value backed by comparable sales, photos, and notes on general condition and marketability. The appraiser confirms key features, measures living area, and flags obvious defects that could affect value or loan approval. They do not perform a comprehensive, component-by-component inspection, and they typically do not provide repair cost estimates.
Inside a home inspection
Your inspector conducts a visual evaluation of structure, roof, exterior, interior, electrical, plumbing, and HVAC systems. They identify items to repair, monitor, or evaluate further, and may estimate remaining life for major components. Specialty testing, like mold or radon, is usually outside a standard inspection unless you add it to your scope.
Supplemental inspections common in Shelby County
Depending on the home’s age, location, and features, you might add:
- Termite/WDO inspection.
- Sewer scope or septic evaluation.
- Radon testing.
- Roof certification or separate roofing evaluation.
- HVAC diagnostic.
- Structural or foundation assessment.
- Pool and spa inspections, if applicable.
How findings affect your purchase
When inspections reveal issues
If your inspection uncovers problems and you have an inspection contingency, you can request repairs, ask for a credit or price reduction, or bring in specialists to define scope and cost. You can also terminate if your contingency allows. If the seller agrees to repairs, you may schedule a re-inspection or request contractor invoices before closing.
When the appraisal comes in low
If the appraised value is below the contract price, lenders generally will not lend above the appraised value. Common paths include adding cash to bridge the gap, asking the seller to reduce price, submitting additional comparable sales for reconsideration, or renegotiating based on your appraisal or finance contingency. FHA and VA loans add program rules and minimum property requirements that may require repairs before closing.
Who pays for repairs
Repair costs are negotiated. In a competitive market, sellers may push back on repair requests. In a slower market, buyers often win more concessions. Some loan products can finance repairs into the mortgage, but they add steps and underwriting requirements.
Local due diligence tips buyers use in Collierville
- Review permit history. Ask your agent to check records with the Town of Collierville Building Department and relevant Shelby County offices for major renovations or additions.
- Confirm termite/WDO. In this region, many buyers get a WDO inspection. Some lenders, and certain loan programs, may require evidence of inspection or treatment.
- Align timing. Schedule inspections early in your contingency period so you can negotiate or walk away before the appraisal is ordered.
- Prepare for appraisal risk. Markets can move quickly. Ask your agent for recent comparable sales so you understand value before you offer.
Your step-by-step checklist
- Build your offer with an inspection or due-diligence contingency and a clear timeline.
- Hire a qualified home inspector and ask about report turnaround time.
- Add supplemental inspections as needed: WDO, sewer scope, radon, roof, HVAC, structural.
- Budget for both appraisal and inspection fees separately.
- Coordinate with your agent and lender on appraisal timing and next steps if value comes in low.
- If repairs are needed, decide on requests, credits, or termination based on your goals and deadlines.
Choosing the right pros
- Inspectors: Look for experienced professionals who work regularly in Collierville and Shelby County. Ask about certifications through recognized groups, such as ASHI or InterNACHI, local references, sample reports, what is excluded, and whether you can attend the inspection.
- Appraisers: Your lender selects the appraiser. Ask your lender about the appraisal process, anticipated timing, and how they handle disputes if you need a reconsideration of value.
The bottom line
An appraisal protects the lender and focuses on value. A home inspection protects you and focuses on condition. When you plan both well and negotiate clear contingencies, you reduce stress and keep your Collierville purchase on track.
If you want a calm, well-timed path from offer to closing, connect with a local team that knows Collierville, Shelby County records, and lender expectations inside and out. Connect with Ware Jones to craft your plan, choose trusted vendors, and move forward with confidence.
FAQs
What is the difference between an appraisal and an inspection in Collierville?
- The appraisal is a lender-ordered valuation to confirm market value for the loan. The inspection is a buyer-ordered evaluation of the home’s condition for your decisions and negotiations.
Who orders and pays for the appraisal and inspection?
- The lender orders the appraisal and you typically pay the fee. You hire and pay the home inspector and any specialists, such as termite or sewer scope providers.
When do appraisal and inspection happen during a Collierville purchase?
- Inspections occur early in your contract’s due-diligence period, often within 5 to 10 business days. Appraisals are usually ordered later by your lender after initial underwriting steps.
What if the appraisal comes in below the contract price?
- You can add cash, ask the seller to reduce price, submit better comparable sales for reconsideration, or renegotiate or cancel if your contingency allows. Lenders generally do not lend above appraised value.
Are termite (WDO) inspections required in Shelby County?
- Requirements depend on the loan program and lender, and they are common in the region. Many buyers obtain a WDO inspection, and some loans may require a clearance or treatment before closing.
Do appraisers check for code compliance or permits?
- Appraisers may note obvious unpermitted work or safety issues that affect value or loan approval, but they are not code inspectors. Ask your agent to review permit history for major renovations.
