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Who Pays For a Home Inspection During a Real Estate Transaction?

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Home inspections are a compulsory part of home purchases that may slip by both buyers and sellers when they’re calculating the cost of the sale. You may not know who should pay for a home inspection, or even which parts of the inspection you will be responsible for conducting.

This guide breaks down the cost of home inspections in terms of who pays for what. There is a difference between who usually pays for a home inspection and who does so every time, so some of the dealings in home inspections will have to be decided on a case by case basis. This is a general guide on what you should know as either a buyer or a seller who doesn’t want these responsibilities to be a surprise.

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Why you need a home inspection?

Since home inspections aren’t technically required by law, according to Clever, who connects home buyers and sellers with a huge network of agents, you may be wondering why you should worry in the first place. This is especially true when considering all the other responsibilities on your plate, from additional repair costs for sellers to homeowner’s insurance and other closing costs for buyers.

Before you even wonder who is going to pay for your house inspection, you need to know why you should consider it mandatory to get one. This necessity can be summed up in one word: insurance.

As a buyer, a home inspection is your insurance policy on the quality of the listing. You’ll find out if the house has hidden damage, additional costs you didn’t foresee, or any other inconsistencies in comparison to the listing.

As a seller, it’s another form of insurance. By verifying the honesty of your listing with a home inspection, you have an insurance policy on record in case of any discrepancies later. Damage that occurred after the sale could be discerned as the new homeowner’s fault if an inspection was done beforehand.

The ideal situation is for the inspection to reveal nothing. However, the paid price of the house may ultimately be affected by the results of the inspection. Further negotiation may be necessary, which is why it could cost you thousands of dollars to neglect home inspections when buying a house.

How do you schedule a home inspection?

The first thing to know about home inspection schedules is to get started early. This is so you can leave time to discover any necessary repairs or inconsistencies, so you can either get them fixed, or renegotiate the price of the house.

The seller is not present during the inspection. It’s a meeting between the real estate agent’s recommended inspector and the buyer to discuss the house’s structure, furniture, and systems. These include plumbing, electrical, heating, air conditioning, roofing, and any other structural systems in the house. The seller does get a copy of the home inspection once it’s formalized.

Who pays for the home inspection?

If a home inspection has not been conducted by the time an offer has been made or accepted, the inspection is the buyer’s responsibility. The buyer has the upper hand when they have an inspection.

This is because anything discovered during the inspection could impact the asking price. The seller may have to renegotiate the offer on the house or lose their listing altogether if the buyer’s inspection reveals hidden damage or inconsistencies in the listing.

This is why the buyer is the one who usually pays for home inspections. However, there are reasons for the seller to be the one who pays for house inspections.

A seller can pre-emptively schedule a home inspection in order to be in control of the situation. Rather than wait for the buyer to find defects in the house, which could prompt renegotiated prices, the seller can do it ahead of time to make sure that everyone concerned knows the condition of the house and offers money for its stated condition.

Sellers who are in a hurry and don’t want to deal with long turnover times associated with inspections should consider doing their own. Particularly those who need to sell quickly, such as those who use the instant offer services of iBuyers, can expedite the process with this preliminary work. Sometimes, it can even save your listing. 

The question of who should pay for a home inspection may not be a matter of necessity, but opportunity: a prescient seller may be able to save a lot of time and money by paying for it themselves.

What happens if I don’t pay?

Naturally, as a buyer, you want to avoid inspection and appraisal costs. Since neither are mandated by law, they seem like a good opportunity to save some money. However, you shouldn’t shirk on either of these processes.

In terms of inspections, you need them to make sure that you’re getting what you pay for. This includes discovering hidden problems with the house like insect or water damage and further inspecting the furniture and appliances to confirm your investment. You don’t want to be surprised by repair costs later – discovering an inconsistency in the listing can even give you a leg up in your negotiations with the seller.

In terms of appraisals, you likely can’t get a loan from a bank without an appraisal initiated by them and paid for by you. They need confirmation that the house’s value matches the loan. If you plan on getting a mortgage on this house, it’s necessary to have an appraisal.

Negotiating repairs

The offer contract between the buyer and seller establishes the deal being made – specifically, it denotes when a buyer or seller can pull out of their obligation to the sale. Inspections play a major role in activating these contracts.

Discovering wood rot or any unlisted issue with the house during an inspection can change the deal being made. Many buyers will pull out of a sale after discovering a secret mold deposit or a faulty foundation.

However, some buyers may want to pursue negotiations on these repairs to lower the price of the house or change the contract. A seller that wants to make the sale happen may be accommodating even when the contract doesn’t explicitly specify the terms of the repair, particularly if the seller’s market is competitive in your area.

Who pays for these repairs? 

The short answer is that it depends on the results of the negotiations. A buyer may request the seller to pay for them; depending on the offer contract, a seller may oblige to keep the sale active or seek a new buyer. Conversely, a buyer may want to handle the repairs themselves and will ask for a price reduction in the house listing to compensate.

As a buyer, it’s important to look for what moving.com refers to as the “’as is’ clause,” which is a section of the offer contract specifying that the offer is for the house “as is.” In other words, it means that the seller isn’t obligated to repair anything that wasn’t noticed by the buyer or agent on the initial walkthrough. 

The takeaway

The question of who pays for a home inspection when buying a house is dependent on what the inspection is intended to accomplish. Buyers who want to examine the house to either make sure that they’re getting what they’re paying for, or who need confirmation of the house’s condition to secure loans, are probably the ones who will pay for the home inspection. 

However, a seller may initiate an inspection to get ahead of the buyer’s needs, control the outcome of the process, and make their original listing accordingly. This can prevent undue hassle later.

Surrounding home inspections, many housing deals are renegotiated, altered, or canceled altogether. It’s not a legally mandatory step in the homebuying process, but it would be foolish for any buyer or seller to avoid it when so much money and time is on the line.

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