Over 80% of home sales include a home inspection. While many lenders require these for closing, most homebuyers choose them even when their lenders don’t require them.
If you’re in the market for a new house, you might get to decide if you want a home inspection for the property you’re buying. If you do, you’ll need to add a home inspection contingency in the purchase offer.
A home inspection contingency is a standard clause in most purchase agreements, but do you understand what this means and how it works? If not, continue reading this guide to learn what it is and why you need it.
It Is a Condition
A real estate purchase agreement is a contract between a buyer and a seller, and it states many vital details. It includes the home address, purchase price, and loan information.
It can also include real estate contingency clauses, including a home inspection contingency. A contingency is a condition of the offer.
When you have conditions on a home sale, it means that things must take place or pass tests for the deal to go through. A home inspection condition means two primary things:
- The buyer has the right to hire a home inspector for an inspection of the home
- The buyer has the right to change the terms of the deal if the inspector detects issues with the home that the seller had not revealed
When you’re buying a home, you shouldn’t waive this contingency. Instead, you should view it as a necessity for protection when buying a house, even if it’s a brand-new home.
You Must Add the Clause to the Purchase Offer
It’s vital to understand that this clause is something you must add to the purchase offer when writing it. After finding a house you want to buy, your real estate agent will sit down with you to write the real estate contract.
If you want the ability to get the home inspected, you must include this clause in the contract. If the seller accepts your purchase offer, they agree to let you get the home inspected.
The seller also understands that you can back out if the inspection reveals flaws. Your agent can help you word this clause properly and add other essential contingencies you might need.
What a Home Inspection Contingency Provides to the Buyer
There are several reasons you need this contingency. Here are a few:
Lender Requirements
When you want to buy a house with a mortgage, you have a lender with a stake in the deal. As a result, your lender creates requirements for the loan, and one might be that you must get a home inspection.
Lenders require this for protection. If they issue a loan for a home with serious mechanical issues, the buyer might not be able to afford the repair bills. If this occurs, the buyer might walk away from the house and loan.
The lender would lose money in the deal. Therefore, many lenders require home inspections.
Your Protection
The second reason is for your protection. Imagine if you bought a house that needed $50,000 in repairs that you didn’t know about before buying it.
Spending $50,000 that you weren’t planning on could cause severe financial problems for you. If you get an inspection, you can avoid surprises like this when purchasing a home.
You’re investing a lot of money into this home, and knowing its condition is necessary. The only way you can find out, though, is through a home inspection.
Your Options After You Get the Results
The results from a home inspection can come back with several different conclusions. The best option is when the inspector doesn’t find any serious issues. Instead, they find minor issues that are common with houses.
When you get a report like this, you will have no reason to renegotiate or void the deal. In fact, you won’t have a legal right to change the terms of the purchase offer. You’ll have to continue purchasing the home as agreed.
When a home inspector finds some pretty serious issues during the inspection, you might want to learn more about your options. Here are the main options you can choose:
Renegotiate on the Price
Suppose the house needs an additional $20,000 in repairs that you weren’t expecting. You can ask the seller to drop the price by $10,000 to $20,000 to compensate for these unexpected bills you’ll have.
Negotiate on the Repairs
If you’d rather have the seller make the repairs before moving in, you can ask for this instead. With this option, you ask the seller to complete specific repairs.
If the seller agrees, they pay for these expenses and complete them before you close on the house. The downside to this option is that you’ll have no control over how they fix the issues.
Void the Purchase Offer
There are times when the problems are too big for a buyer to deal with, and the buyer might not want to go through with the deal. If this occurs, a home inspection contingency lets you void the deal without any consequences.
Why You Should Be Present During the Inspection
As the buyer, you’ll be responsible for paying the home inspection fees. You’ll also have the choice whether you are there during it or not. If you’re not sure if you need to be there during it, talk to your real estate agent.
Your agent will probably suggest attending it. When you’re there, you can watch the inspector work off a home inspection checklist. You can make sure they assess everything on the checklist, and you can ask questions during it.
Hire an Inspection Company Today
Buying a house is not something to take lightly. After all, it’s an expensive purchase, which is why you should always add a home inspection contingency to your purchase offer.
If you’re ready to hire a company for your inspection. Give us a call. We service the Northeast Ohio area and can set up an appointment at a convenient time for your home inspection.