Found this discussion, which helped a bit http://german.stackexchange.com/questions/4130/difference-in-pronunciation-of-er-vs-ihr
Basically the gist of it is that: Er sounds a bit more like the English word "Air" where Ihr is very clearly more of an English "Ear" sound.
Hope that helps!
I got it wrong translating the sentence as "It needs her" (forgot that 'ihr' was dative case, not acusative, and that it also meant 'you'). But now I'm wondering if it would be correct to say "Sie braucht es" instead of "Es braucht sie" (It needs her)? I always get confused with the order of the words in German and if it is really possible, then I guess both sentences would have a double meaning, right? How can I identify when it means "It needs her" instead of "She needs it" and vice-versa? Also, "Braucht sie es" and "Brauch es sie" and other structures like that can be only used as questions or as afirmative sentences as well? :)