Inspection Contingencies 101

For home buyers, the inspection is the time when you look deep into a home's 'eyes' and see if you want to go further in the relationship. For Sellers, it's often full of anxiety, wondering what problems lurk around their home, or how 'alarmist' the home inspector will be. Standard real estate contracts all have 'inspection contingencies' these days, let's take a closer look at this section of the contract.

First, remember that everything is negotiable up front. Typically, sellers expect there to be an inspection, so this isn't usually a point of contention. Buyers will ask for a certain length of time to perform all inspections and let the sellers know their response. If they've asked for a 10 day inspection period, then the buyer's have 10 days to do the home inspection and any follow up inspections such as getting a mold report or a contractor's estimate for things that came up.

When they are ready to respond, the buyer has three options:
1. OPTION 1: Terminate the Contract- I always include this option for my buyers because I'd hate for them to get stuck if the inspection is terrible. The buyers will get their earnest money back and head off to look for another home.

2. OPTION 2: Accept the Home "AS-IS"- This is the desired outcome. It's always nice when there are no inspection surprises and the buyer can happily move forward. With most of the bank-owned properties, this will be your main choice unless you want to terminate. Banks are not interested in doing any repairs whatsoever.

3. OPTION 3: Renegotiate /Ask for Repairs- The usual contract offers this option where the buyer can send a list of requested repairs to the Seller. If the cost of the repairs is above the previously agreed upon repair costs, if there were any, then it's time to renegotiate. Depending on the nature of the work to be done and other circumstances, we can negotiate not only repairs to be done, but perhaps ask the seller to pay closing costs "in lieu of repairs" or even reduce the sales price. It all hinges upon how important it is to the buyer and how motivated the seller is to sell. Things can get messy at this point, but we are usually able to find an agreeable solution.

This is just a simple overview. Inspections and negotiations can get complex sometimes. I always try to help my clients understand what's going on each step of the way. Once we get past the inspections, the focus is on getting the transaction closed and keeping things on track.

My advice: Don't skip the inspection. You always want to know what you don't know about the home you are purchasing.

-Peter

www.NashvilleCityHomes.com