5 Things Buyers Need to Know About Home Inspection Contingencies
Home inspection contingencies are a valuable tool when buying real estate. Buyers should never skip a home inspection before closing, nor should they waive inspection contingencies without careful consideration. A home inspection contingency could be a benefit or disadvantage in a competitive seller's market, but it can offer considerable protection for the homebuyer. Use this information to get the best possible deal on your new home.
What Is an Inspection Contingency?
Purchase contracts usually have a few contingencies that allow buyers to cancel the contract, and inspection contingencies are common. In many cases, contingencies will enable the buyer to cancel or renegotiate the contract without a penalty, such as losing the earnest deposit on the purchase. The rules governing contingencies depend on the state, so buyers should be sure that they understand their contingencies' limits before making a purchase offer.
How Does a Home Inspection Work?
A home inspection is a short test of the home's structure and systems by someone trained and certified to conduct the inspection. Home inspections are one of the most common homebuying expenses. Typically, the inspector comes to the property at a scheduled time. The inspection takes a few hours. The inspector runs through a checklist, using various tools to assess the condition of the home and the function of appliances and systems. After the inspection, the inspector generates a detailed report that identifies possible concerns. The buyers receive a copy of this report.
If buyers have an inspection contingency, they may have several days to review the report, research their options, and decide if they want to address any of the concerns. Inspection contingencies should explain what buyers can do if they choose to raise an issue.
What Is Not Included in a Home Inspection?
Although the home inspection is designed to be somewhat comprehensive, it is also fairly surface-level in its investigation. The inspector may only have access to the property for a few hours, and the inspection is not designed to cause damage to the property as part of the testing process. As such, home inspections do not usually involve the following:
- Inspecting electrical or plumbing systems behind walls
- Testing appliances during inappropriate seasons, such as an air conditioner in winter
- Climbing on the roof during rainy or icy weather
- Testing for the presence of contaminants that take time to produce results, such as radon, lead, or mold
The home inspection contingency often depends on the type of home inspection, and some types of testing may not be included in the contingency.
Why Do Some Buyers Waive the Home Inspection Contingency?
In a strong seller's market, buyers do what they can to make their purchase offers as attractive as possible. Sellers may be more likely to accept an offer from a buyer who provides a bigger earnest deposit or limits the number of contingencies in the contract. If the home is newer or appears in good general condition, buyers may choose to waive the inspection contingency. They may also waive it because they would rather be responsible for making repairs than lose the opportunity.
How Can Buyers Avoid Waiving the Home Inspection Contingency?
For many buyers, it may be better to try negotiating with the seller instead of simply waiving the inspection contingency. There are a few things that buyers can do to improve the advantages of their offers, such as:
- Increasing the amount of the purchase offer
- Agreeing to the seller's preferred timeline for closing
- Minimizing requests for allowances or the payment of closing costs
- Offering to pay some of the seller's closing costs
Depending on the market, buyers may need to consider more than one of these alternatives.
Inspection Contingencies Can Save You Thousands
Buying a home usually includes a home inspection. What buyers do with the information depends on inspection contingencies and their goals. Understanding the details will help buyers make the best decisions for them and begin confidently planning a moving timeline.