Home Inspection Contingency | 7 Important Things to Know

A home inspection contingency is an important contingency to have in place when purchasing a home. Buying a home is ahome inspection contingency major investment that can be both exciting and nerve-wracking at the same time. There are many things to consider when buying a home, from the location to the price, to the size of the property. However, one aspect of home buying that should not be overlooked is the home inspection contingency.

A home inspection contingency is a clause in a real estate contract that allows the buyer to have the property inspected by a professional home inspector before finalizing the sale. It is imperative that a buyer have a home inspection to understand any flaws that may exist in the home. The last thing a buyer needs to do is buy a home with deferred maintenance that is a money pit.

The purpose of the inspection is to identify any potential issues or defects with the property that may not be apparent during a visual inspection.

The home inspection contingency gives the buyer the option to back out of the sale if the inspection reveals any significant issues with the property. This protects the buyer from unknowingly purchasing a property with hidden problems that could be costly to repair or may make the property unsafe to inhabit.

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While the home inspection contingency is an essential aspect of the home-buying process, many buyers are not familiar with what it entails. In this article, we will provide an in-depth look at the home inspection contingency and what buyers need to know. It is always important to have a contingency plan in place in case any issues arise with a property you are interested in purchasing.

There are sellers who stipulate that they are selling the home as-is, however, that does not mean that a buyer cannot ask for repairs after their investigations.

The Purpose of the Home Inspection Contingency

Home inspection contingencyAs mentioned earlier, the primary purpose of the home inspection contingency is to identify any potential issues with the property that may not be visible during a visual inspection. A professional home inspector will thoroughly examine the property and provide a report that outlines any deficiencies, including issues with the roof, foundation, plumbing, electrical system, HVAC system, and more. However, a home inspector can trigger other inspections!

Once the inspection report is complete, the buyer has the option to negotiate with the seller to address any issues that were identified. This could include requesting repairs, a credit towards closing costs, or a reduction in the purchase price of the property.

If the seller is unwilling to negotiate, the buyer has the option to back out of the sale without any penalty. This protects the buyer from purchasing a property with significant defects that could be costly to repair or may make the property unsafe to inhabit.

The Importance of a Professional Home Inspection

It is essential to hire a professional home inspector to conduct the inspection. A professional home inspector has the Home Inspection Contingency | 7 Important Things to Knowexperience and knowledge to identify any potential issues with the property that an untrained eye may miss.

The inspector will provide a detailed report that outlines any deficiencies found during the inspection. This report will give the buyer an accurate picture of the condition of the property, allowing them to make an informed decision about whether to proceed with the purchase.

Some buyers may be tempted to skip the home inspection to save money, but this is not recommended. The cost of a home inspection is relatively small compared to the potential cost of repairing significant issues with the property.

Furthermore, skipping the home inspection can leave the buyer vulnerable to purchasing a property with hidden defects that could be costly to repair. It is always better to be safe than sorry and invest in a professional home inspection to ensure that the property is in good condition.

How Does a Buyer Prepare for the Home Inspection

Buyers should prepare for the home inspection by gathering all of the necessary documentation. This includes the purchase agreement and all disclosures about the property. Another important document to read and bring to the inspection is the natural hazard disclosure.

Buyers should also arrange for a qualified home inspector to conduct the inspection. If the buyer does not have a home inspector, then they can ask their Realtor for a referral. It is important for the buyer to talk to the inspector prior to the inspection. The inspector will provide you with a detailed home inspection report that outlines any deficiencies found during the inspection.

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Oftentimes, a home inspection may trigger other inspections including a sewer line inspection, roof inspection, structural inspection, and geologic to name a few. If there are signs of water intrusion, then it is recommended to get a mold inspection. The cost of all of these inspections is the buyer’s responsibility. This is money well spent when purchasing a home.

Knowing what to expect when purchasing a property is essential to mitigating risk and ensuring that you are making an informed decision.

Review Disclosures

The seller will provide the buyer with seller disclosures about the property. The buyer should review these prior to having a home inspection.

The disclosures will include information about the property that the seller should disclose. You may find information about any known deficiencies with the property, including the roof, foundation, plumbing, electrical system, HVAC system, and more.

If you are aware of a potential problem with the property prior to having the inspection, then the buyer can ask the inspector to review the problem and get their feedback.

Negotiating After the Home Inspectionhome inspection contingency

Once the inspection report is complete, the buyer has the option to negotiate with the seller to address any issues that were identified. This could include requesting repairs, a credit towards closing costs, or a reduction in the purchase price of the property.

It is essential to work with a real estate agent who has experience negotiating after a home inspection. A skilled agent will know how to effectively communicate with the seller and negotiate the best possible outcome for the buyer. Buyers may ask for big-ticket items in request for repair and if the home is priced accordingly, the seller may not agree to those items. It is the buyer’s decision on what to negotiate with the seller after a home inspection.

In some cases, the seller may agree to make repairs before closing, while in other cases, the seller may agree to offer a credit towards closing costs or reduce the purchase price of the property.

The home may be a fixer-upper, and that is acceptable as long it is priced accordingly. And the buyer needs to be aware of the cost to improve it.

If the Seller is Unwilling to Negotiate Repairs

If the seller is unwilling to negotiate, the buyer has the option to cancel the purchase without penalty. However, the buyer needs to stay within the agreed-upon home inspection contingency timeline to ensure that the buyer is in the bargaining position. This protects the buyer from purchasing a property with significant defects that could be costly to repair. The seller is under no obligation to make repairs to the property per the Residential Purchase Agreement. If the buyer cancels the purchase agreement, then the home will go back on the market after a failed home inspection.

A professional home inspection is the best way to ensure that the property is in good condition and that any potential issues are identified. If you have any questions about the importance of a home inspection or how to proceed after an inspection is completed, speak with a real estate agent who can help guide you through the process.

When to Remove the Home Inspection Contingency

Buyers may ask themselves what does it mean to remove inspection contingency?  It means that the buyer is satisfied with the physical findings of the report and plans to proceed with the purchase of the home. There are other real estate contingencies including the loan and appraisal contingency.

A buyer will need to be satisfied with the results of the home inspection and the seller’s response to the request for repairs.

Buyers may decide to remove the home inspection contingency after they have received their report. This is typically done when the buyer is completely satisfied with the results of the inspection and other inspections, and there are no significant issues that need to be addressed.

Buyers should wait for the seller’s response and ensure they are satisfied with the seller’s response.

Final Thoughts

A home inspection contingency is an important one and one that a buyer should not waive. It provides valuable information to the buyer about the physical condition of the home. It is a good idea to ask questions during the home inspection as well. The Realtor will also perform a visual inspection of the home and it is one more piece of information about the home for a buyer to review.

About the Author

The blog post “Home Inspection Contingency | 7 Important Things to Know” was written by Sharon Paxson, a top Newport Beach Real Estate Agent. With experience since 2005, representing buyers, sellers, landlords, and tenants, we welcome the opportunity to share our expertise with you and guide you through your real estate transaction.

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ABOUT ME

Sharon Paxson is a full-time REALTOR® with EQTY | Forbes Global Properties and has been specializing in residential real estate throughout the Newport Beach area since 2005 assisting Buyer’s, Seller’s, Landlords, and Tenants with their real estate needs.

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