After months of searching for the right house, you’ll probably feel anxious and excited when you narrow down the search to the one you want to buy.
Once you find this house, your real estate agent will help you write up a purchase offer to buy it. As you write this up, there will be lots of decisions you will need to make.
You’ll need to determine an offer amount, a timeline, and the types of contingencies you want to include. One of the best ones to add is an inspection contingency.
Inspection contingencies are totally optional, in the legal sense, but as a home buyer, you should not view this as optional. You should automatically include it in any offer you write up.
Let me explain why you should always add a home inspection contingency on a purchase offer, as well as what this means, and how it protects you.
The Definition of an Inspection Contingency
In general, a contingency is a request you place on a purchase offer. When added, it creates a condition of some kind that the buyer must agree to or allow.
There are numerous types of contingencies you can add, and a home inspection one is a very popular type. An inspection contingency gives you several rights, which include the following:
- To get a home inspection completed
- To choose the company that performs the inspection
- To back out of a real estate deal if the inspector finds previously undisclosed issues
- To negotiate on the repairs needed or the price of the house for the issues found
As the buyer of the property, you are responsible for paying the inspection fees, but you are also free to choose the company that conducts it. You are also free to be present during it, and you should highly consider doing this.
What the Inspection Includes
A home inspection offers an overall review and evaluation of the main components of a home. The inspector you hire works off a checklist and goes through each item step by step. During this, he or she makes notes about findings.
The inspector notes the condition of each component, physical evidence of problems, and potential risks with each part of the house.
The inspection includes an overview of the home’s roof, exterior, doors, windows, HVAC system, plumbing system, electrical system, insulation, and more.
When complete, you will receive an inspection report that details every finding in the house. The inspection will either return favorably or unfavorably, depending on what the inspector finds.
Ways a Contingency Inspection Protects You
The key purpose of adding the contingency for an inspection is for the protection it provides to you.
Let’s assume the inspector doesn’t find a single issue or risk with the house. In this case, you’d have peace of mind knowing you’re getting a great home.
Let’s say, though, the inspector finds a major problem, such as water damage in the basement. If this is a problem you did not know about when you made the offer on the home, you’d want to know about it before you closed on the deal.
If you didn’t find out about it now, you’d be in for a real surprise later on after getting moved in.
Suddenly, you might find out there’s structural damage with the home or mold growing in it, and it all resulted from the water damage present from years ago.
Would you instead take the risk for surprises like this, or avoid them altogether?
Getting the inspection allows you to find out this information before you close on the deal, and the contingency gives you the right to back out of the purchase or negotiate on it.
Negotiating on a Deal After the Inspection
Once you know all the details about a home’s condition, you can work on the next step — negotiating. Negotiating is a right you have from the home inspection contingency, and there are multiple ways to handle it.
Here are some options:
1. Back Out and Buy a Different House
A contingency gives you the right to back out of the deal without any risks or losses if the inspection does not come back with favorable results. If you think that the issues are too big to deal with, you could back out.
2. Ask the Seller to Make the Repairs
If you still want to buy the house, despite the issues found, you could request that the seller pays for them.
To handle it this way, you should request bids from contractors for the work. You should request the right to choose the contractor, too. If the seller agrees, he or she will pick up the tab for all the work the home needs.
3. Renegotiate on the Price of the Home to Compensate for the Issues
The other option you have is to renegotiate the price of the house based on the repairs needed. If the work costs $20,000, you could ask the seller to reduce the price by this amount.
If you choose this route, you could save money by paying a lower price on the house, but you would be responsible for paying the repair bills yourself.
Learn More About Our Services
Hopefully, you have a good understanding and grasp on what a home inspection is and why adding an inspection contingency is a necessity.
If you have further questions about home inspections or need to schedule one, we can help.
Contact us to learn more about the process, the costs, and the benefits you’ll receive by hiring us for your inspection.