Seller Disclosures and Home Inspections: What Buyers Need to Know

Buying a home comes with plenty of excitement, but it also comes with important questions about inspections, disclosures, and what sellers are legally required to share before closing.

Whether you’re purchasing your first home after PCS orders or preparing to buy a property "as is," understanding your rights and responsibilities can help you avoid costly surprises and navigate the transaction with greater confidence.

Disclosures 101: What Are Sellers Typically Required to Disclose?

In real estate, a "material defect" is a significant issue that impacts a property’s value or structural integrity. Many states have standardized disclosure guidelines and legal statutes, such as a Residential Real Property Disclosure Act. Disclosing property damage and seller responsibilities isn't about scaring buyers away. It’s about transparency and reducing liability for all parties involved.

Patent defects are open and obvious issues discoverable during a standard walk-through, such as a cracked window or visible water stains. Legally, the burden is on the buyer to notice these.

Latent defects are hidden issues not easily visible, such as a cracked foundation behind a finished wall or a faulty sewer line. Sellers are typically obligated to disclose known latent defects, even in "as-is" sales.

Common must-disclose issues: 

• Water damage or flooding
• Roof leaks
• Foundation problems
• Mold
• Plumbing, HVAC, or electrical issues
• Termite and pest history
• Fire damage
• Insurance claims
• Septic or sewer problems
• Boundary disputes or easements

As a buyer, a home inspection is your primary defense against latent defects. While a seller isn’t legally forced to fix every finding during an inspection, failing to disclose known issues can lead to litigation, even years after purchase.

What Sellers May Not Need to Disclose

While sellers are generally required to disclose known material defects, there are some issues that may not legally require disclosure depending on state laws and the specific circumstances surrounding the property.

Examples of disclosures often not required:

• Paranormal activity or stigmatized property concerns 
• A previous death in the home, although this varies widely by state. Some states require no disclosures at all, whereas others only require disclosure if the death was violent, or intentional, along with a timeline, such as a year to three years following the event.
• Neighbor disputes, unless legally documented
• Cosmetic wear and tear
• Quality of school districts
• Nearby sex offenders (buyers are usually directed to public databases for research)

The governing rule of thumb is that sellers are generally not expected to disclose issues they genuinely don't know about.

Understanding Caveat Emptor ("Buyer Beware") and "As-Is" Offerings

While most states require sellers to disclose known material defects, some states follow versions of caveat emptor, meaning "let the buyer beware," where buyers carry more responsibility for discovering defects before purchasing the property. Even in those states, however, a seller cannot intentionally conceal defects or fraudulently misrepresent known latent defects.

Sellers may also list the property "as-is" in every state, which simply means the property is being sold in its current condition, with no expectation that the seller will make repairs. Even in "as-is" sales, sellers generally must still disclose known latent defects, as required under applicable state law. Buying a home "as-is" doesn't mean the seller can hide defects, nor that the buyer waives all legal protections.

A buyer can still conduct inspections, renegotiate if major problems are found, request credits at closing for significant repairs needed, or walk away during inspection contingency periods (provided a clause is included in the offer and accepted by the seller). This is exactly why a thorough home inspection matters, and perhaps even more so in the above scenarios.

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What Happens During a Home Inspection

After an offer is accepted, buyers typically hire a licensed home inspector, often through recommendations from their real estate agent, lender, or local referrals, to evaluate the home’s major systems and structural components.

After the inspection, buyers receive a detailed report outlining potential issues, recommended repairs, and maintenance concerns. This report helps them decide whether to move forward, negotiate, or request repairs before closing.

Home inspections are almost always paid for by the buyer, and typically range from $500 to $1,500 depending on the size of the home and locale.

Home inspectors will evaluate:

• Roofing systems
• Foundation
• Plumbing, electrical, and HVAC
• Attic and crawl spaces, and chimneys
• Drainage
• Appliance functionality
• Safety concerns
  
  

When to Get a More Specialized Inspection

A homebuyer doesn’t always need to wait for problems to occur to request a more specialized home inspection. Some considerations that may warrant more scrutiny include:

• Older homes: sewer scope or electrical inspection to ensure the home has been brought up to current codes
• Rural homes: septic and well testing
• Areas with known termites: thorough pest inspection
• Signs of foundation movement, including sinkholes and leaning retaining walls: a structural engineer
• Roof concerns: a roofing specialist
• Mold or moisture concerns: environmental testing

Military homebuyers may need to make their initial home offer from afar, and a more thorough inspection can provide incredible peace of mind, in addition to a deeper look to uncover any potential issues during the due diligence process.

Typical Home Inspection Timeline

The buyer submits an offer and includes a section that states they request a home inspection.

Inspection contingency window begins. The offer will stipulate when the home inspection must occur and when findings will be brought to the seller. This timeline is fairly short, such as within seven to fourteen days, for an inspection to occur. If major issues are found, remedies must be negotiated within a specific number of days (three days is common).

Some sellers may be flexible with timelines, but it's critical to note that if a buyer misses these inspection windows as defined in the offer, the seller is under no obligation to allow inspections.

Tip: Some listings may include that a pre-inspection has been done at the seller’s expense, with the report to be included for serious buyers. While a pre-inspection can prove useful, it's always recommended for a buyer to obtain their own independent inspection.

Can a Seller Refuse a Buyer’s Inspection?

Legally, a seller can refuse an inspection request, counter with a shorter inspection timeline before accepting an offer, or outright decline offers containing inspection contingencies. In hot seller’s markets, some buyers forego an inspection clause entirely and are comfortable taking the risk that, if any issues are found, it will be upon the buyer to resolve. 

Most buyers using financing still strongly prefer inspections, and some loan products and insurers require that certain minimum property conditions be met.

Once a contract is signed by both parties, inspection rights are governed by the purchase agreement. If a seller agrees to an inspection clause in the contract and signs the offer, then both buyer and seller have a legally binding contract. If a seller attempted to refuse inspections after a signed contract, the most likely legal remedy would be a voided contract, with the option for the buyer to get their earnest money back.

What Happens if the Inspection Finds Major Problems?

Once the inspection is concluded, a thorough inspection report will be presented to both the buyer and the seller, or the seller’s agent. Where things get complicated quickly is when the inspection uncovers major issues that threaten the buyer’s ability to close the sale. For example, a roof fails an inspection. Most insurers will not underwrite a policy for a defective roof, and most lenders require homeowners insurance before closing. Without insurability, the deal falls apart.

Other major issues can include unsafe electrical systems, residential building code violations, foundation instability, active leaks, septic and sewer issues, and active environmental hazards, such as mold or pest infestations.

The deal may still be salvageable, as there are a few remedies available to the buyer.

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Option 1: Request repairs.

It’s possible that the seller may be open to fixing and completing the repairs before closing.

Option 2: Request a credit at closing or an escrow holdback.

If the seller or buyer is on a constricted timeline, there may not be enough time to complete the repairs before the closing date. If the repairs will not affect loan generation or the ability to get an insurance policy, a closing credit is a good solution, as it doesn't require the seller to come out of pocket and pay for the requested repairs upfront.

Both the buyer and seller agree on the credit amount, and the amount is withheld at closing from the seller’s proceeds, then distributed to the buyer to proceed with repairs.

Option 3: Renegotiate the purchase price.

Another option is to adjust the purchase price to reflect repair needs.

Option 4: Buyer gets specialized insurance.

While not as common, depending on the repair needed, it may be possible for the buyer to obtain a short, specialized insurance policy to protect the property while repairs are being made in order for the lender to proceed with underwriting.

Option 5: Terminate the contract and walk away.

The original contract language will dictate the options for both a buyer and seller if a problem is discovered upon inspection. It's important to remember that the seller may not be legally obligated to fix the issue. However, once a seller discovers a newly disclosed material defect, they'll be required to disclose it to future buyers, even if the current deal falls apart.

VA Loans and Appraisal Considerations

While VA loans don't technically require a traditional home inspection, VA appraisals, however, require the property to meet Minimum Property Requirements (MPRs). As examples, in order to underwrite the loan, the property must have:

• Safe and functional roofing
• Functional heating
• Adequate water, electrical, and sewage systems
• No major safety hazards
• Structural soundness

It's important to note that a VA appraisal is not the same as a home inspection. While both a VA appraisal and an independent buyer’s inspection will look at the major systems in a home, a home inspection will provide a much more thorough look at the overall property condition, and is arguably worth the additional time and expense. 

Seller Responsibilities Before Closing

Typically, property conditions are verified during the closing process, particularly if additional repairs were requested following inspection. Many buyers, or the buyer’s agent, will conduct a walkthrough 48 to 72 hours ahead of a closing date, to ensure that all agreed upon repairs have been completed and that the property is still in the same condition as it was upon the initial offer.

If the property condition changes before closing, sellers generally should update the disclosures in writing, even if the home is being offered "as-is."

Some examples: 

• A new water leak
• Storm damage, including roof damage
• Appliance failures, if the appliances are conveying with the property and annotated as working during the initial disclosure
• Insurance claims

Transparency protects both parties and helps avoid potential legal disputes after closing.

How Long After Buying a House Can You Make a Complaint?

If a buyer later discovers that a seller knowingly concealed a material defect, legal remedies may exist. However, time limits vary significantly by state legal statutes, ranging from a matter of days after discovery up to years later. It's incumbent upon the buyer to provide substantive evidence to back up their claim. In many cases, buyers must demonstrate that the seller was aware of the issue and failed to disclose it during the transaction process.

This can become especially complicated with hidden issues such as water intrusion, mold, foundation concerns, or unpermitted repairs that may not have been visible during a standard home inspection. If you discover concerns, document them immediately, save all inspection and closing paperwork, and reach out to your agent or a local real estate attorney to better understand your next steps.

In Summary

Military homebuyers already navigate compressed timelines, home buying from afar, and uncertainty. A thorough home inspection and understanding seller disclosures help reduce surprises and protect one of the biggest investments your family will make.

Whether you're preparing to buy your first home or sell one, MilitaryByOwner has the real estate experts and resources to help you navigate inspections, disclosures, and negotiations. We're here to support you every step of the way!