A home inspection contingency is a cornerstone clause embedded within a purchase agreement. This contingency stipulates that the completion of the home sale is contingent upon the outcome of a meticulous home inspection.
The home inspection contingency is a helpful service for buyers. It helps you with a second opinion from an expert before finalizing the house. It also empowers the prospective buyer to comprehensively assess the condition of the property.
Hiring a Home inspector is crucial to assess the property before purchasing a home. Buyers can cancel the agreement anytime in the contingency period. They can protect themselves from a big investment in a faulty house.
- Home inspection contingencies protect the buyers: It allows the buyer to assess the property’s condition before finalizing the purchase.
- Is the home inspection contingency clause worthwhile? Yes, if buyers find serious issues in the house then they can cancel the agreement and retrieve their earnest money.
- Time taken in a Home inspection: The actual inspection lasts for a few hours. The findings are typically provided to buyers within 24 to 48 hours.
What Is an Inspection Contingency?
A home inspection contingency in a purchase agreement states that the home sale will be contingent upon the results of a home inspection. This clause allows a buyer to assess the property’s condition before buying a house.
Based on the home inspection report, the buyer can back out of the agreement if any material defects or safety hazards are identified. Likewise, the buyer will receive the earnest deposit back.
Why Are Home Inspection Contingencies Important For Buyers?
The Home inspection contingency is an important part of a home purchase agreement as:
- It provides the privilege to the buyers to safeguard themselves from buying a faulty house.
- Buyers can back out of the sale if they discover deal-breaking issues.
- Buyers can make informed decisions and negotiate repair costs before finalizing the purchase.
- Buyers can save themselves by investing a small portion of money as the average cost of a home inspection is approximately $300 to $500.
Should You Waive Inspection Contingency?
Waiving the inspection contingency can be beneficial in certain cases. It increases the likelihood of closing and winning a bidding war. However, it comes with risks. You become responsible for the required repairs after closing the house.
Sellers generally value certainty. A buyer with fewer contingencies in the purchase agreement could have a greater advantage. Waiving off inspection contingency from your purchase agreement could be beneficial for you. It could help you to get an ideal house in a competitive seller’s market.
While it’s advisable to get a home inspection, it’s not obligatory to act upon it. You can enhance your offer in other ways in a seller’s market. Offer a higher amount above the appraised value. You can also cover some closing costs which are usually paid by sellers.
What Are Some Challenges Of House Inspection Contingencies?
Home inspection contingencies protect home buyers. But the clause still has certain potential downsides.
Timeline is the biggest and the most common challenge for Home buyers. It is difficult for the buyer to schedule a home inspection within the decided deadline.
The short timeline forces the buyers most of the time to proceed without the inspection. Sometimes they also have to attempt to extend the deadline with the seller.
How Do You Write a Counter Offer After a Home Inspection?
After a home inspection, you can request repairs or a price reduction from the seller. Your agent negotiates with the seller or their agent to address the issues.
A quote from any local contractor will help you write a counteroffer. It will base on repair estimates. Buyers actively need to do this before the deadline for buying the house. You can also ask for a price reduction based on repair costs.
The buyers’ agent negotiates with the sellers or their agent to make the home repairs. Remember, the seller has no obligation to make repairs.
A home inspection contingency empowers buyers in the home purchasing process. Buyers can use the clause to inspect the property before finalizing the deal.
The contingency ensures that buyers can make informed decisions and protect their deposits. It provides buyers the opportunity to negotiate repairs and final home prices. It is an essential safeguard in the home-buying journey.
Frequently Asked Questions
How long after a home inspection does a buyer have to back out?
The home inspection contingency is between 7-10 days timeline. Buyers should consider this from the day of signing the offer to buy the house. A buyer can back out of the deal within the timeline.
How should seller prepare their home for a home inspection?
Home sellers can prepare their home for inspection by cleaning, decluttering, and home staging.
What happens if inspection contingency expires?
The earnest money of buyers may turn non-refundable. They should consult their agent and consider legal advice for clarity.