Is a Home Inspection Required?

Mortgage lenders typically do not require a standard home inspection or a copy of the inspection report. However, we recommend that buyers arrange an inspection to better understand the property’s condition.

See our Home Inspections page for more information and answers to common questions.

Understanding Wood-Destroying Insect (WDI) Inspections

A wood-destroying insect (WDI) inspection, often called a termite report, looks for evidence of insects such as termites and carpenter ants, along with related damage.

Some home inspectors offer this service for an additional fee. Certain loan programs may require a WDI report; VA loans, for example, have specific requirements depending on the property and transaction.

Deciding Whether to Get a Home Inspection Before Listing

A seller’s pre-listing inspection has both advantages and disadvantages.

Potential drawbacks: An inspection may uncover previously unknown issues that could need to be disclosed or addressed, depending on applicable disclosure requirements.

Potential benefits: Identifying issues before listing gives sellers time to consider repairs and plan for negotiations. Sharing an inspection report may also demonstrate transparency and help buyers better understand the property.

A buyer may still choose to order an independent inspection, even if the seller already has a report.

Ultimately, the decision depends on the property and the seller’s circumstances. A knowledgeable real estate agent can help weigh the options.

An appraisal estimates a property’s value for mortgage financing. The appraised value may differ from the price a buyer is willing to pay, particularly when market conditions or the property’s unique features make comparable sales difficult to evaluate.

Preparing for the appraisal can help sellers anticipate potential concerns. Read How to Prepare for an Appraisal as a Seller for practical guidance.

Reviewing Helpful Appraisal Resources

• Home Appraisal Process
• Understanding Appraised Value vs. Sales Price

Deciding Whether to Order an Appraisal Before Listing

In most cases, sellers do not need to order their own appraisal before listing. A buyer’s lender generally requires an appraisal that meets its own requirements, so a seller-ordered appraisal may not replace it.

A real estate agent familiar with the local market can help estimate a reasonable listing price using comparable sales and current market conditions.

However, a pre-listing appraisal may be worth considering in certain situations:

• Selling without a real estate agent: An appraisal may provide another source of information when setting an asking price.
• Evaluating whether to sell: Sellers who need to estimate their potential proceeds may find an appraisal helpful, alongside expected selling costs and the mortgage payoff.
• Selling a unique or rural property: Limited comparable sales can make valuation more challenging. An appraisal may help identify potential issues before a buyer’s lender evaluates the property.

To estimate your potential proceeds, see Seller’s Net Sheet & Seller’s Costs.

Lenders do not typically inspect properties themselves. However, an appraiser’s observations may lead a lender to request an evaluation by a qualified professional.

For example, visible foundation cracks or other signs of possible structural issues may prompt a request for an inspection by a professional engineer. Other concerns may involve the roof, heating and cooling systems, or other major components of the property.

The appropriate next step depends on the issue, the loan program, and the lender’s requirements. Sellers should work with their real estate agent to evaluate potential options before deciding how to proceed.

Whether to make repairs before listing depends on the property, the seller’s budget and timeline, and the likely effect on the sale.

Addressing visible or significant issues before listing may make the home more appealing to buyers and reduce the chance of unexpected negotiations later. However, not every repair will provide a financial return, and buyers may have different preferences about cosmetic improvements.

A real estate agent familiar with the local market can help prioritize repairs and weigh their potential costs against the expected benefits.

Major repairs are not always easy to address through a standard mortgage. Renovation loans have different eligibility requirements and processes, and some property conditions may need to be resolved before a loan can close.

Depending on the transaction, the buyer and seller may negotiate seller concessions rather than having the seller complete certain repairs. Concessions are subject to contract terms and loan-program limits, and they do not guarantee that a property condition will be acceptable to the lender.

In some circumstances, a lender may allow an escrow holdback for eligible repairs after closing. Availability and limits depend on the loan program, the type of repair, and lender approval. Some repairs may need to be completed before closing and cannot be handled through a holdback.

If the property has significant repair concerns, discuss the situation with the buyer’s lender early to understand what options may be available.