Who Pays for the Home Inspection in Real Estate: Seller or Buyer?

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Selling a house isn’t cheap. As you reach the home inspection stage, it’s natural to wonder: Wait, who pays for the home inspection again? Seller or buyer? Is this another fee I’ll have to cover? At an average cost of $330, it’s not an insignificant chunk of change.

As for the general inspection, sellers can breathe a sigh of relief: it’s almost always the buyer’s responsibility to pay for the home inspector’s services, including the onsite visit and report. If your buyer orders a home inspection before closing — and 95% of buyers purchasing existing homes will — you’re off the hook for this one.

But (and there’s always a but!) the seller can end up “paying” for the inspection in other ways, in the form of a price cut or repairs. If all this is a little confusing, here we’ll explain the following:

  • Why buyers pay for the professional home inspection
  • Factors that impact the cost of the inspection services
  • When a seller would choose to pay for their own “pre-listing” inspection
  • How inspection findings lead to additional costs for the seller
  • Who pays for specialty inspections, such as for termites or radon
What a buyer pays for during the home inspection
Source: (EVG photos / Pexels)

Some background on why buyers pay for the home inspection

Buyers who purchase a full home inspection are hiring an expert to “pop the hood” of your home, so to speak, and they want to hear the complete story of this property — the good, the bad, and the ugly. If a seller was to pay for the home inspection, that’s a conflict of interest. After all, what seller wouldn’t prefer a flawless report card?

By paying for the inspection, buyers get to hire an inspector of their choosing and gain the peace of mind that they’re getting an objective, unbiased evaluation to inform their negotiations moving forward. This is their chance to view the home beyond what’s included in the listing description and how the property appears to the untrained eye. Plus, the onus is really on the buyer to do their homework. If they want an inspection, it only makes sense that they pay for it.

What goes into the cost of a home inspection?

According to Nick Gromicko, founder of the International Association of Home Inspectors, a general home inspection costs between $300 and $500.

“Many factors go into the price,” he says. “The size of the home changes the price, since a larger home costs more to inspect. Another factor would be the age of the home and if the inspection is very far away, then the inspector has to charge more.”

Lynn Peters is a top real estate agent in Pensacola, Florida, says that in her area, a home inspection costs between $175 and $600, with the higher price tags going to multi-story homes, homes with gabled roofs, and homes with visible siding or roof damage. When the inspector knows that they’ll need to use extra scrutiny to find every potential issue, the price goes up.

When does the buyer pay for the home inspection?

Most home inspectors will expect payment at or during the time of the inspection itself. It’s sometimes possible to negotiate for payment at closing, but it’s rare.

“Usually you pay at the inspection,” says Gromicko. “Some inspectors bill at closing, but others say that is a conflict of interest, because the inspector would be worried that if he found too much in the house the sale would fall through, so to avoid that conflict of interest, it’s good to pay before or during the inspection.”

A buyer who pays for a home inspection can use it for negotiation or as a to-do
Source: (Andrea Piacquadio / Pexels)

How buyers will use the home inspection 

The hundreds of dollars spent on the home inspection, however, often pale in comparison to the benefits buyers receive from the inspection. Peters points out that the information on the report from the home inspection is more than just negotiation fuel.

“For an as-is contract, the buyer has the right to get it inspected and they can cancel or renegotiate the price, so the home inspection gives the buyer peace of mind, knowing that if anything major turns up, it will be handled,” says Peters. “The buyer can also use the inspection as a kind of checklist if they are doing a renovation loan, as well. It helps the buyer with financing.”

For minor issues and repairs, Gromicko points out that you may not negotiate but rather just take those suggestions to heart for your first few home improvement projects.

“A lot of the home inspection information isn’t for the negotiating of the deal; it’s just useful maintenance information,” says Gromicko. “The home inspection is a checklist of things to look at in the future.”

Should you pay for a pre-listing inspection?

So, the costs of the buyer’s inspection are covered by the buyer. However, there is another option on the table for sellers who’d rather get the unvarnished truth about their home before it ever hits the market.

“We recommend to our sellers that they get a pre-listing inspection, just so that we can see if there is going to be anything that will arise on the buyer’s home inspection,” says Peters. “There’s a cost involved there; it depends on the features of the house, like whether it has a pool or not.”

Peters points out that there’s no conflict of interest if the seller is simply gathering information. If they discover major repairs are needed during the pre-listing inspection, the seller has the option to make those repairs before putting the house on the market. They can also adjust the price accordingly and transparently, in anticipation that the buyer’s home inspector will identify those same issues.

Information is power, for both the seller and the buyer.

What about specialty inspections?

General home inspections sometimes reveal a need for a specialty inspection. These specialty services include a radon inspection, which often costs $145 to $715, a pest inspection, which can vary in price but tends to cost about $100, or a septic system inspection, which usually falls in the range of $250 to $500.

All of these inspections are typically paid by the buyer. If it was very important to a buyer that the seller pay, that would be negotiable, but it is so infrequently done that it wouldn’t be recommended.

“In the last couple of years, the specialty inspections have always been the buyer’s responsibility,” says Peters. “There can be an outdated addendum on VA loan contracts, though, requiring the seller to pay for a pest inspection, but that’s not the case anymore, so that addendum shouldn’t be there.”

What does the seller pay, if not the home inspection fee?

If the buyers seem to be responsible for a lot, keep in mind that there are many fees and responsibilities that the seller carries in the transaction. First and foremost, they may make thousands of dollars of repairs based on the results of the inspection, or alter the price of the property.

“A seller had been in their home for two and a half years after paying cash for it, never having a home inspection done,” says Peters.

“Their buyers got a full home inspection, and the home inspector called me and said the home had aluminum wiring and needed rewiring. The seller renegotiated the contract to pay for the house to be rewired, an expense of $12,000.”

The home inspection may cost the seller much more in surprise repairs than it cost the buyers, though in this particular story the seller and buyer were both satisfied: the buyer got a rewired house with lower fire risk, and the seller still made some money off the sale, despite the big price tag on the repairs.

Sellers also commonly pay for:

  • A home warranty: Home warranties, according to Peters, are usually about $510 for a year, and are often the seller’s responsibility. The price rises if the home is large or has additional items, like a pool.
  • Half of the buyer’s title insurance policy: While you may negotiate this, it is customary in many places for the seller to pay half of the buyer’s title insurance policy, which varies in price but averages to about $1,000 per policy.
  • Wire transfer fees: Peters explained that many lenders and title companies prefer to use wire transfers on the day of closing, and these carry a small fee that is usually paid by the seller. These fees vary by your bank, but are generally anywhere from $15 to $50 per transfer.
  • Other fees, as negotiated with the buyer: Individual sales may involve other fees, such as a boundary survey, and some buyers negotiate for a portion of their closing costs to be paid by the seller. Each sale is different, but knowing which expenses tend to fall to which party gives you some leverage in negotiations.
Buyers who pay for the home inspection can use it to their advantage
Source: (Andrea Piacquadio / Pexels)

Home inspections, like much else, can reopen negotiations

It makes sense for a home inspection to be tailored to the needs of the buyer, given that they rarely know as much about the property as the seller knows from occupying the property. However, the seller has lots of options along the way. They can use a pre-listing inspection to help them strategically set the price or negotiate which closing fees and costs they will (or will not) help the buyer cover.

A top real estate agent has a good feeling for what kinds of fees are rarely changed in your market, versus which fees can be shifted through negotiations. Your agent’s expertise on this front will help both you and the buyer strike a fair and transparent deal.

Header Image Source: (kurhan / ShutterStock)