Who Pays For Appraisal And Inspection?

Inspections and appraisals are two key steps when buying or selling a home, and they protect both the buyer and the seller. For most people, the biggest question is simply who pays for them. They aren’t as expensive as the other real estate closing fees, but you’ll still want to factor them into your budget. 

The good news is that the answer is usually clear once you know how each one works. Keep reading to find out who pays for a home appraisal and inspection when selling a house, what each one costs, and how you can skip both if you sell to a cash buyer.

What is a Home Appraisal?

A home appraisal is a professional estimate of your home’s value done by a licensed appraiser who has no relationship with you or the buyer. Lenders use it to confirm the home is worth the amount they are being asked to lend.

How Does an Appraisal Work?

Your buyer’s lender orders a home appraisal to ensure that your home’s value supports the mortgage amount. The appraiser checks several factors to determine your home’s fair market value, including comparable sales (comps), the home’s condition and size, and current market trends. A local appraiser usually gives the most accurate result, since they know recent sales and conditions in your area better than an out-of-town one.

How Long Does It Take?

After your buyer’s mortgage lender orders an appraisal, the licensed appraiser usually schedules a visit to your property within 48 hours. Once they arrive, they look at the inside and outside of your house using an appraisal checklist and take photos for their records. They often ask for extra details, such as the age of your appliances and any recent updates or renovations. Be ready to show permits, receipts, and any proof of work done on the property. The visit itself can take 30 minutes to a few hours.

You won’t get the actual appraisal report and market analysis right away, though. It can take a few days, and sometimes more than a week, to receive the full report on the appraised value. The timeline depends on your property’s location, the complexity of the home, and the number of clients the appraiser has at the time.

How Much Does a Home Appraisal Cost?

Generally, home appraisals cost $300 to $600, but this depends on a few factors, including your home’s size, the exact location, and the type of mortgage the buyer applied for.

Appraisal Cost Based on Type

Appraisal Cost Based on Property Type

Appraisal Based on the Type of Mortgage

Who Covers Appraisal Fees During a Home Sale?

The buyer pays for a home appraisal when their lender orders it. The lender usually collects the payment in advance, and it’s non-refundable.

As a seller, you don’t have to cover the appraisal cost, since it isn’t needed on your end. The lender orders it only to confirm your property is worth the loan amount, and your real estate agent is already running a comparative market analysis to set the right listing price.

If you still want an independent opinion of your home’s value, you have every right to order your own property appraisal. Your buyer may also ask you to cover the appraisal fee as part of seller concessions, though whether you agree is up to you.

Do You Have to Pay the Appraisal Fee Upfront?

In most cases, buyers pay the appraisal fee upfront before a lender accepts their application, and that’s quickly becoming the norm. That said, some big banks refund the fee once the buyer accepts the loan.

Buyers should shop around for financing and check which lenders charge the real estate appraisal fee upfront. This helps because complex properties can lead to higher appraisal fees.

Who Pays For a Home Appraisal When You Refinance?

If you refinance your home, you pay the appraisal fee yourself, in addition to title insurance and the other standard closing costs. Depending on the lender, you may pay this upfront or at closing. You can also ask whether the lender will roll the fee into the loan so you pay it off over time instead. If paying out of pocket isn’t realistic right now, it’s worth considering.

If the Sale Falls Through, Who Pays For the Home Appraisal?

If the sale doesn’t go through, the buyer still pays for the home appraisal. As noted earlier, this cost is non-refundable unless the sale is canceled before the appraisal is finished. In that case, the buyer can request a partial refund from the lender.

In a similar situation, if the sale collapses because the seller breached the contract, the buyer may be able to recover the appraisal cost by suing the seller for damages.

Why Do Some Appraisals Come in Low?

Appraisals can come in low for several reasons: property condition problems, a high number of homes for sale in the area, weak comparable sales, and renovations or additions that weren’t legally permitted. It’s rarely one single cause, but a mix of a few. Getting a listing appraisal before you go to market can flag these issues early, so the buyer’s appraisal is less likely to come in under your asking price.

Can You Challenge a Home Appraisal?

Yes, you can challenge a home appraisal, as long as you have solid evidence that it isn’t accurate. To formally challenge an appraisal, you can ask the lender for an ROV or Reconsideration of Value. Check the appraisal report thoroughly and point out any mistakes, such as the wrong number of rooms, incorrect room sizes, or renovations that weren’t counted. You can also ask your realtor to find more comparable homes to send to the lender.

What is a Home Inspection?

A home inspection is an assessment of a property’s condition, done by a professional inspector. It checks the home’s major systems and structure to surface any problems before the sale closes.

How Does Home Inspection Work?

The buyer uses the inspection results to negotiate repairs, ask for credits, or request a lower sale price. 

Some sellers order their own house inspection to ensure they price their property right and to determine which repairs are worth making. In most home sales, a standard inspection checks the property’s structural, mechanical, and electrical systems.

How Long Does It Take?

A home inspection usually takes 2 to 4 hours, depending on your home’s size and current condition. A single-family home or small condo is usually quicker, while a multifamily home takes longer.

The age of your home also affects how long the inspection will take because homes that are 40 years or older can hide structural and electrical problems that take the inspector longer to find. Extra features like a pool or spa also add time.

Once the walk-through is done, you can usually expect the detailed home inspection report within 24 to 48 hours.

How Much Does a Home Inspection Cost?

A home inspection costs $300 to $500. The exact price depends on the size of your home, its location, the type of property you own, and the inspector’s experience. The fee covers the inspector’s time and labor, as well as any tools used during the walkthrough. They inspect your foundation, electrical system, HVAC system, plumbing, roofing, drainage, and more using their inspection checklist.

What’s the Cost of a Specialized Home Inspection?

Beyond the standard inspection, you can add specialized inspections to examine specific problems more closely. Here’s the typical average cost:

Who Pays for a Home Inspection During a Home Sale?

Whoever orders the inspection pays for it, so if the buyer requests one to get a detailed look at the property’s condition, they cover the cost out of pocket. If you order a pre-listing home inspection to find what you can fix and set a better price, you cover it. Keep in mind that everything is negotiable in real estate, so you could still end up paying inspection fees as part of your closing costs.

What Are the Most Common Issues Found During a Home Inspection?

It’s also helpful to know the problems an inspection might turn up, since the report affects your negotiating power and how much you walk away with.

• Foundation Issues: Horizontal cracks in the walls, bowing walls, uneven floors.
• Roof Damage: Sagging roof, leaks, missing shingles
• Water Damage: Stains, mold growth in the bathroom, musty odors
• Pest Infestation: Rodent and termite infestation, damage caused by wood-boring insects
• Electrical Issues: Faulty electrical panels or overloaded panels
• HVAC Problems: Aging systems and dirty ductwork

Who Pays For Repairs After a Home Inspection?

Who pays for repairs after a home inspection heavily depends on market conditions, state laws, and how well the buyer and seller negotiate. Some states require sellers to make repairs, especially for health and safety hazards such as mold and asbestos. Sellers may also take on repairs in a buyer’s market, where they have less negotiating power.

If the buyer included a home inspection contingency in their offer, they can renegotiate repairs, ask for a price cut, or back out of the sale. Skilled realtors handle this back-and-forth all the time and can negotiate repairs or credits on your behalf. In a strong seller’s market, many buyers waive this contingency to make their offer more competitive.

Which Should Come First: Home Inspection or Appraisal?

Both pre-listing and buyer-ordered home inspections are done before the appraisal process. A pre-listing home inspection is done weeks or even months before a property is listed on the open market. This is primarily completed so the seller can fix issues that can deliver high ROI, set a better listing price, and feel prepared for negotiations. A buyer-ordered inspection happens after you accept an offer and your property goes under contract. The buyer’s inspector will assess your property and provide a detailed inspection report. Then, both sides negotiate repairs and credits based on what was discovered during the inspection.

Only after the buyer’s inspection is complete and negotiations are concluded will the buyer order an appraisal, which isn’t cheap. As mentioned, most appraisals cost $300 to $600, and the price can climb higher for a multi-family home. Ordering one too early wastes money if the inspection then reveals major issues that prevent the sale from going through.

How Long is a Home Inspection and Appraisal Valid?

A home inspection doesn’t technically expire, but a general rule of thumb in real estate is that the report stays useful for about 90 days. For most conventional loans, a home appraisal is valid for around 90 to 120 days, but government-backed loans like FHA and VA allow longer windows, as shown below.

Skip the Inspection and Appraisal by Working With a Cash Buyer

Selling your house to a cash buyer like Naples Home Buyers lets you skip the formal inspection and appraisal. As cash house buyers in Springfield, MA, we do a single walkthrough of your home and make you a cash offer within 24 hours. We won’t ask you to make repairs if we find problems, because we’ll handle the fixes ourselves after we close. Since we pay with our own cash, there’s no lender to order an appraisal.

Skipping the formal inspection and appraisal makes selling to us faster and far less stressful. If your timeline doesn’t fit a traditional sale, and you’re worried these steps could make your sale fall through, get a no-obligation cash offer instead.

Key Takeaways: Who Pays For Appraisal And Inspection?

Inspections and appraisals are key tools that buyers and lenders use to protect their interests during the sale. The buyer traditionally pays both, although the seller may be asked to cover these fees or issue credits if the appraisal comes in low.

If you’d rather sell without appraisals or long inspections, a cash buyer lets you skip both. As a company that buys houses in Massachusetts, we buy houses with just one walkthrough, so there are no repeated showings or inspections to deal with. Contact us and get your no-obligation cash offer today!

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