Who Pays for Home Inspection: Buyer or Seller?

A home inspection is synonymous with residential real estate. Although a house can change hands without it, you almost always have to deal with it whether you’re the party buying or selling. So, who pays for home inspection? How does it affect the transaction? When does this requirement become unnecessary?

Get your biggest questions about it to navigate the real estate process more effectively.

What Is a Home Inspection?

A home inspection evaluates a property’s structural integrity, assessing the condition of its systems, including heating, electrical and plumbing. It excludes cosmetic characteristics.

A licensed home inspector conducts it. This professional checks the house’s interior and exterior areas, looking for damage and identifying causes for concern that may not be apparent to someone without a trained eye. However, state laws may not require inspectors to enter an obstructed crawl space or climb onto the roof.

If you’re the buyer, you, your agent, and the seller’s agent may be present during the inspection. The seller may choose to stay, although most real estate experts recommend the homeowner to be elsewhere to avoid influencing the inspector’s objective opinion.

A home inspector compiles all findings in a report. This document details every single issue found and the recommended repair.

Who Pays for Home Inspection?

The buyer usually pays for the home inspection because this party requests and benefits from it. Sometimes, the seller may foot the bill to uncover and fix structural damage early. Proactiveness makes sense if you want to find a serious buyer soonest and expedite the sales process.

If a house’s condition turns out to be less than ideal post-inspection, you — as a buyer — can use the identified defects as a bargaining chip to renegotiate a more favorable deal. Asking the seller to fix what’s broken or for a discount to offset the repair costs you’ll incur once you gain ownership of the property.

The home inspection is a standard contract contingency included in a buyer’s offer to a seller. An inspection contingency entitles you to have the property in question thoroughly and professionally inspected as you exercise your due diligence before making the purchase.

If the seller refuses to change the price in light of the home inspection’s findings, you may withdraw from the deal without losing your earnest money.

A home inspection serves your interests, not the seller’s. Therefore, agreeing to an inspection contingency is disadvantageous to the selling party, even if the buyer shoulders the cost.

When given a choice, a seller will entertain offers from interested buyers willing to forgo this contingency and reject those that require it.

In a seller’s market — where buyers generally have less power during negotiations — you may have to waive the inspection contingency when bidding on a sought-after property. Giving up your right to inspect the house sweetens the deal without increasing your bid and adds more certainty to the seller, making your offer more appealing.

What to Expect From a Home Inspection as a Seller

As a seller, expect a home inspection to last several hours and the report to be available a few days later.

Without hiring an inspector to evaluate the condition of your house before listing it, you most likely have blind spots regarding your property’s structural health. The home inspection report may shed light on hidden damage you didn’t consider when pricing the property.

What Fixes Are Mandatory After a Home Inspection?

As a seller, you’re not automatically responsible for the home inspector’s proposed repairs. Regardless of who pays for home inspection, its findings don’t necessarily render your house unfit for sale. They may be deal-breakers, though.

Still, a buyer in a hurry may agree to purchase your property as-is in exchange for a discount. In a seller’s market, the pressure to worry about all the necessary improvements is less.

Who Is Responsible for Doing the Final Walkthrough of a Property?

The buyer and the buyer’s agent attend the final walkthrough. If you’re the buyer, this intimate tour allows you to take a closer look at the property without the seller and the seller’s agent bothering you.

This private walkthrough lets your camp to evaluate whether the house is structurally and aesthetically the same as when you first saw it. Suppose the seller agrees to address some or all of the issues discovered during the home inspection. In that case, this opportunity allows you to verify whether the problem areas are up to snuff.

Is an Inspection and Appraisal the Same Thing?

Although home inspections and appraisals have some similarities, they differ regarding who requests them, what they’re for, how waivable they are, and who can perform them. 

An appraisal is necessary when you seek financing to purchase a house. Your mortgage lender requires it to determine the fair market value of the property you want to buy, ensuring its price isn’t higher than its actual worth.

The party who usually pays for home inspection also pays for the appraisal fee — the buyer. You may pay for it upfront or at closing. In a buyer’s market, sellers may consider covering it if the deal falls through to attract serious offers.

This step is vital because the loan holder will lose money when the borrower defaults on the financial obligation and the mortgage balance exceeds the property’s value. Liquidating such a commodity results in a loss.

Only a certified or licensed residential appraiser is fit to perform this job. This professional inspects the house’s condition but doesn’t note areas needing repairs. An appraiser also factors in comparable properties, the property’s neighborhood or community and its size relative to the land it sits on into the equation.

Although home appraisers are prone to bias, no professional is more qualified to provide an opinion of value for mortgage lending purposes than them.

If you take out a conventional loan, your lender may skip an appraisal to determine the would-be collateral’s value when selling the mortgage to Fannie Mae. The government-sponsored enterprise may make an exception and agree to value acceptance — a lender-submitted judgment of a property’s fair market value without an appraisal confirming it.

In some cases, property data must supplement value acceptance to ensure the estimate is reliable enough without an appraiser’s insight.

Home Inspection Makes Everyone Pay

Unearthing a house’s unknown and hidden structural imperfections can change the complexion of the deal for all parties involved. Even if you have to pick up the check, a home inspection is worth the expense. The undiscovered or undisclosed issues allow you to renegotiate a more favorable deal.