As with any business transaction, it is important to do your research and know the ins and outs of the property you're interested in purchasing—for many, buying a new home is the biggest financial decision they'll ever make, so having as much information as possible is crucial. The main goal with appraisals and inspections is to provide itemized details, from top to bottom, of the property in question.
As a potential buyer, the more information you have upfront, the more likely you'll be saved from serious headaches later on in the game—think of Tom Hanks and Shelley Long in every real estate broker's favorite movie, The Money Pit. Real estate is a business of trusted relationships, so you should rely on recommended appraisers and inspectors from your broker (if you work well together) or a home-owning friend who's had a good experience. It is also important that the appraiser is very familiar with the neighborhood, the local market, uses public records, and that he or she has access to MLS (Multiple Listing Service).
Remember, an appraisal is an objective value of the property (or at a least a highly informed estimate) and only includes permanent structures in the home—so while those might be some particularly beautiful ABC Home furnishings, they won't increase the appraisal value. Many times, an appraisal can be bank-ordered when applying for a mortgage loan, as a way of protecting the lender (bank) and buyer from potentially dodgy investments.
An inspection, on the other hand, is more focused on the nuts and bolts of a property, a thorough structural checklist that takes a close look at the condition of, among other things, the roof, the foundation, and the plumbing. The goal of an inspection isn't to valuate anything, but rather to ascertain what repairs might be needed. While this is often not completed until the time of a contract (this checklist should be included in the purchasing contract), it would do you a service to have a pre-inspection, which can also be advantageous in your negotiations. Plus, this can save you from a Tom and Shelley situation. The sky is falling? No, that's the roof caving in.
Appraisals and inspections better help you understand the true value of the property and give you (and your friend, the bank) a thorough grasp of your potential investment, and only take up a few hours and cost just a few hundred dollars a pop.
Research, research, research.