Selling our home and during the inspection this wiring issue was noted. The 14 gauge wiring needs to be replaced with 12 gauge wiring in the electrical panel.

Please tell us more... there are many ways to satisfy the code and a contract.
Can you give us specific quote?

If the 14 awg wire is on 20 Amp breakers - there is a problem.
And it involves a lot more than just in the panel.

If feasible, replace the 20A breakers with 15A breakers, and leave the 14awg wiring in place.

Have a licensed electrician check it out for you. The home inspector is looking out for the buyer- not you.

That request is absurd. You don't just replace wire like that, and especially only at the panel. Sounds like another limited knowledge home inspector.

He probably means like smearcase said, #14 on a 20A breaker. The solution is painfully simple. Just replace the breakers with the correct size.