I would check with your lawyer. In my opinion, if the contract is not fully executed, signed by both buyer and seller and there is nothing in writing regarding the fee for the engineer's report, then it probably is your responsibility. You could ask the seller for reimbursement, not sure if they will comply. This is not legal advice, but to my knowledge a seller has the right to accept an offer up until the time the home closes. Of course there are legal issues once the home is in contract, but that should be discussed with a lawyer.