Home appraisal vs. Home inspection: What is the difference? — Property Cayman | Real Estate

Home appraisal vs. Home inspection: What is the difference?

Home appraisal vs. Home inspection: What is the difference?
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Sebastien Nehme

Real Estate Agent

A home appraisal, also known as a valuation, and a home inspection are two of the most common conditions that must be met before closing a property sale. And yet they are also two of the most commonly confused conditions.

They may seem similar but are completely different in purpose and scope.

Let’s review each of them. What are they, and why are they important?

Home appraisal or Home valuation

The goal of a home appraisal is quite simple. It is intended to determine the market value of your property. The most probable price it would command on the market.

This figure is important for several reasons, but most notably when it comes to financing. A lender will not sign off on a loan for more than the property’s value.

So if a prospective buyer needs to borrow $750,000 to purchase a home valued at $740,000, there may be an issue. You can read more about that situation in a fantastic article from my colleague Jude Holland: Property Valuation Gaps: High price, low appraisal.

The appraisal process includes a certified valuation surveyor visiting the home or property. This person likely works for a property consulting company or surveyor agency. In the Cayman Islands, most surveyors are registered members of the Royal Institute of Chartered Surveyors (RICS).

They will walk through the property, take photos and take note of the condition. This helps the valuer compare the property to other properties in the area. And while they will review the entire property, interior and exterior, this is not an in-depth inspection. They might walk into a room, look around to check that it indeed does exist and note its condition to the naked eye and then move on.

After reviewing the property, the valuator will gather data on recent sale prices on similar-sized properties in the area. They’ll then take into consideration the property’s condition along with the current sales data to produce an unbiased, independent opinion of the property’s market value.

Per RICS international standards, the report will include details of their work clearly and accurately recorded “in a manner that is neither ambiguous nor misleading and does not create a false impression” as well as “legible notes (including photographs or other images) of the findings and, particularly, the limits of their inspection and the circumstances in which it was carried out.”

Here is a list of companies that provide valuation surveys in the Cayman Islands: Cayman Resident: Property Valuations & Appraisals.

Home inspection

A home inspection differs significantly from an appraisal because the goal of the inspection is not to determine a property’s value but rather to assess the state and condition of the home and its contents. And while a home inspection may be a condition included in the offer to purchase, it typically isn’t required by a lender like a valuation is. Instead, it is usually arranged for by the buyer.

It’s about peace of mind for the buyer but also leverage. A home inspection ensures the buyer isn’t caught by surprise after purchasing a property. It can also be used to negotiate price and repairs before closing.

A home inspector will, per the International Association of Certified Home Inspectors inspect a property’s roof, exterior, basement, foundation, crawlspace and structure, heating, cooling, plumbing, electrical, fireplace, attic, insulation and ventilation, doors, windows and interior.

A home inspection is hands-on. Unlike a valuator, an inspector will access the attic, turn systems on and off or check an electrical current. The inspection aims to identify defects within the property that could adversely impact the property’s value or pose a safety risk. And all findings are outlined in the inspector’s report.  

Here is a list of companies that provide home inspection services in the Cayman Islands: Cayman Resident: Home Inspections & Site Surveys.


I hope this article helps clear up the ambiguity of a home appraisal vs a home inspection. If you have further questions or are unsure if you need one, feel free to reach out. I’d be happy to help.

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