A bank inspection is a lender's walk-through of a property before they commit to a mortgage, to confirm the building matches what you told them and is worth what you agreed to pay

When you get a mortgage to buy an apartment, the lender does not just take your word that the place exists or that it is in decent condition. They send an inspector — usually a licensed appraiser or home inspector hired by the bank — to visit the property, photograph it, measure it, and document its physical state. The inspection protects the lender's money. If the apartment is worth less than the loan amount, or if major systems are failing, the bank may refuse to lend, renegotiate the price, or require repairs before closing.

This is different from an inspection you might hire yourself before making an offer. The bank's inspection happens after you have a signed contract and a mortgage commitment in hand. It is a condition of the loan, not optional, and you typically cannot close without it.

Key Takeaways

  • The bank orders and pays for the inspection; you do not hire the inspector or choose who does it.
  • The inspector checks the building's structure, roof, plumbing, electrical, HVAC, and major systems to estimate the property's actual value.
  • If the apartment appraises for less than the purchase price, you may need to renegotiate, pay the difference out of pocket, or walk away.
  • The inspection typically takes one to two weeks from order to report, and you receive a copy of the results.
  • A failed inspection does not automatically kill the deal, but it gives both you and the lender grounds to renegotiate or back out.

Who orders the inspection and when it happens

Your lender orders the inspection after you have submitted a formal mortgage process and the bank has approved you for a loan amount. The timing varies: some lenders order it when ready after approval, others wait until you have a signed purchase contract. Either way, you do not choose the inspector or the timing — the bank does.

The inspector is usually a licensed appraiser employed by an appraisal management company that the bank contracts with. The appraiser is bound by federal standards (the Uniform Standards of Professional Appraisal Practice, or USPAP) and has no financial stake in whether the deal closes. Their job is to estimate the property's fair market value based on comparable sales, condition, and location.

You will receive notice that an inspection is scheduled, typically with a few days' notice. The inspector will contact you or your real estate agent to arrange access. You do not have to be present, though many buyers choose to be there to ask questions or point out recent upgrades.

What the inspector actually examines

The appraiser walks through the entire apartment and documents its condition room by room. They photograph the exterior, interior, kitchen, bathrooms, bedrooms, and any shared spaces. They measure square footage, note the number of rooms, and assess the overall layout and functionality.

They also inspect major systems: the roof, foundation, plumbing, electrical panel, HVAC (heating and cooling), and appliances. They look for signs of water damage, mold, structural cracks, outdated wiring, or failing systems. In a condo or apartment building, they note the building's age, exterior condition, and any visible deferred maintenance in common areas.

The appraiser does not do a deep dive into every wall or crawl space the way a home inspector you hire might. They are estimating value, not performing a detailed inspection for defects. But they will flag anything that materially affects the property's worth or safety — a roof that needs replacement soon, a foundation crack, a non-functioning HVAC system.

How the appraisal affects your loan and closing

The appraiser produces a written report with photographs, measurements, and a final estimated value. This value is what the lender uses to decide how much to lend. If the apartment appraises for the full purchase price or higher, the inspection clears the way to close. If it appraises for less, you have a problem.

An appraisal that comes in below the purchase price is called a "low appraisal." If you agreed to pay $400,000 but the appraisal says the apartment is worth $380,000, the lender will typically only lend 80% of the appraised value — in this case, $304,000. You would need to cover the $20,000 gap yourself, renegotiate the price with the seller, or walk away from the deal.

Some purchase contracts include an appraisal contingency, which lets you back out if the appraisal comes in low. Others do not, which means you are obligated to close even if the appraisal is disappointing. Check your contract before you sign it.

What happens if the inspection reveals problems

If the appraiser notes significant defects — a roof that needs replacement, major plumbing issues, structural damage — the lender may require repairs before closing or may reduce the loan amount to account for the cost of repairs. Some lenders will not lend on a property with certain red flags, like active mold or a failing foundation.

You can ask the seller to make repairs before closing, or you can negotiate a credit toward repairs at closing (the seller gives you money to handle it yourself after you own the place). If the seller refuses and the lender will not lend without repairs, the deal may fall apart.

In some cases, the appraiser's report gives you leverage to renegotiate the price downward. If the inspection reveals $30,000 in needed repairs, you can ask the seller to drop the price by that amount. Whether they agree depends on the local market and how motivated they are to sell.

The difference between a bank appraisal and a home inspection

These are two separate things, and it is straightforward to confuse them. A bank appraisal is ordered by the lender, focuses on value, and is required for the mortgage. A home inspection is ordered by you (the buyer), focuses on condition and defects, and is optional but strongly recommended.

You can hire a home inspector before you make an offer or after you have a signed contract. A home inspector is more thorough than an appraiser — they test plumbing, electrical, HVAC, check attics and crawl spaces, and produce a detailed report of every defect they find. The home inspector's job is to protect you, not the lender.

Many buyers do both: they hire a home inspector early to avoid surprises, and then the bank orders an appraisal later as a condition of the loan. The appraisal may not catch everything the home inspector finds, but it serves a different purpose — confirming the property is worth what you are paying for it.

Timeline and costs

Once the lender orders the appraisal, the appraiser typically schedules the inspection within three to five business days. The actual walk-through takes one to three hours depending on the size and complexity of the property. The appraiser then has seven to ten business days to complete the report and submit it to the lender.

You usually receive a copy of the appraisal report within one to two weeks of the inspection. Some lenders share it automatically; others require you to request it. You have the right to see the report under federal law, so ask your lender if you do not receive it.

The lender pays for the appraisal, not you — the cost is typically $300 to $600 depending on the property type and location, and it is rolled into your closing costs. You do not write a separate check for it.

What you can do if you disagree with the appraisal

If the appraisal comes in low and you believe it is wrong, you can request a reconsideration of value (ROV). You submit evidence — recent comparable sales in the building, documentation of recent upgrades, photos of the condition — and ask the appraiser to review their estimate.

The appraiser is not required to change their opinion, but they will consider new information. If they do revise the appraisal upward, the deal can move forward. If they stand by their original estimate, you are back to renegotiating with the seller or covering the gap yourself.

Some lenders will order a second appraisal if you dispute the first one, though this is rare and usually only happens if the first appraisal seems genuinely out of line with the market. A second appraisal costs extra and delays closing.

Frequently Asked Questions

Can I be present during the bank inspection?

Yes. The appraiser will contact you or your agent to schedule access, and you can ask to be there. Many buyers attend to point out recent upgrades or answer questions about the property. You do not have to be present, but it can be helpful.

What if the appraisal is lower than the purchase price?

You have three main options: renegotiate the price with the seller, pay the difference out of pocket, or walk away if your contract includes an appraisal contingency. Some sellers will drop the price; others will not. It depends on the market and how motivated they are.

Does a low appraisal mean the apartment has problems?

Not necessarily. A low appraisal usually means the appraiser believes the market value is lower than the agreed price, often because comparable properties sold for less or the property needs repairs. It does not always mean the apartment is in bad condition.

Can I hire my own inspector before the bank appraisal?

Yes. Many buyers hire a home inspector after signing a contract but before the bank orders an appraisal. This gives you detailed information about the property's condition and can help you decide whether to renegotiate or walk away before the appraisal happens.

Who pays for the bank appraisal?

The lender pays for it, and the cost is included in your closing costs. You do not write a separate check. The appraisal fee is typically $300 to $600 depending on the property and location.