What is a Home Inspection Contingency?
When you are ready to own a home for the first time, there are so many terms to learn. The entire home buying process can make your head spin!
Once you fall in love with a property, the next step is writing your offer. You are far from finalizing the sale, so don’t worry! After an agreement is made on a price, the seller(s) will pull the house from the market, temporarily allowing you to settle a few details.
Now, you have to figure out if you’re in love with the idea of this property or the actual condition it is in. The last thing you want to do is rush in and buy it on a whim.
To help you determine what problems the house has, you will need a home inspection to answer questions like:
- Can you simply move in and live there?
- Will the pipes burst?
- Is the roof going to leak?
- How old is the HVAC unit?
Buying a home is a tremendous investment, possibly the largest investment of your life. You want to make an educated decision and carefully plan for the future. That’s what makes a home inspection contingency a powerful tool in the home buying process.
Defining a home inspection contingency
Before we can define what a home inspection contingency is, we need to understand what a contingency is. A contingency is a condition set in place that states that if A happens, C follows, but if B happens, D follows.
When you buy a house, a home inspection contingency states that (A) if the house passes a home inspection (C) you will buy the house. However, (B) if the house does NOT pass the home inspection, (D) you walk away from the sale with no obligation.
The home inspection is a key component in determining if you will become the new homeowner.
You will be responsible for the task of hiring an inspector to perform the home inspection at a designated time. The allotted period could be as short as 5 days if it’s a competitive offer or as long as 17 days.
In that time frame, you must have the inspection performed, receive the report, and the seller needs to put in the disclosures.
But there are a few things that you need to understand about home inspections.
A home inspection is not a test
There is no hard pass or fail concerning home inspections. An experienced professional will find something wrong with every house, no matter what. Even newly constructed models will have errors in the craftsmanship or a building code violation hidden inside or on the external components of the building.
So how do you determine if a house “passes” a home inspection? That’s where the grey areas lie in these agreements.
Your home inspection may give you leverage
You have the choice to walk away if the deterioration or damage laid out in your home inspection is more than you are willing or capable of handling.
But, you might be able to use those problems to your advantage. The paperwork has yet to be filled out and you have a professional diagnosis of the condition of the property. You don’t have to leave the negotiations table.
Instead, use the home inspection report to come to a new agreement with the seller. Your real estate agent may be able to convince them to offer credit for the repairs or make some repairs themselves. These would be new terms and conditions laid out in the official deal.
Location is everything
This is where you need to be careful. Once the time for contingency is up, the sellers can choose a different buyer to work with.
If you have a trusted real estate agent, they will tell you if you have a chance to negotiate repairs or a lower price. Sometimes your only option is to take it or leave it.
If you are buying in Wesley Chapel, you won’t have much room to negotiate because the market for that neighborhood is hot. The demand is high, and if you won’t buy at the seller’s price, someone else will.
But other neighborhoods may be more forgiving. Always consult your real estate agent. If you are the type of person who likes to haggle, have your agent avoid popular areas.
Contingency removal
Have you agreed on the price and decided to move forward with the process? Now, you will sign off and remove the inspection contingency. Contingency removal is a legal statement that declares that the home inspection report can no longer affect the deal.
You cannot cancel the contract from this point on because you received and legally accepted all information and disclosures about the property. The condition has been met, and you’re on your way to closing the deal and getting the keys in your hand.
Home Inspections in Tampa Bay
If you are thinking about buying a new home, and you need a home inspection performed on the property, schedule an appointment with an inspector today! Get in touch with Divinity Inspection Service.
