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TLDR: The inspection report will have a laundry list of property defects. This contingency will be satisfied when if you're able to come to an agreement with the seller about what they'll repair and/or provide a credit for.
TLDR: The inspection report will have a laundry list of property defects. This contingency will be satisfied when if you're able to come to an agreement with the seller about what they'll repair and/or provide a credit for.
The inspection involves numerous parties and negotiations but is in effect for a limited duration so it's best to begin the pandemonium immediately after the contract is ratified.
The inspection is often a source of contention between the buyer and seller. This can generally be attributed to difference of opinion regarding what repairs should be conducted after the inspection report is received. Unsurprisingly, the buyer prefers ample repairs and concessions while the seller prefers fewer.
How does the inspection work?
How does the inspection work?
After the contract is signed and the earnest money deposited, you'll contact a local home inspector to come to the property and conduct an inspection. Inspectors are methodical and work quickly as they go through the house, taking notes, making suggestions for improvements or repairs, commenting when a specialist should be hired to further investigate, and taking photos of flaws throughout the property. All of this information is then consolidated into a report and provided to the buyer, who selects from the list which items to ask the seller to repair or compensate.
Tip: Don't be alarmed
Tip: Don't be alarmed
Every property is going to have a slew of issues that come up in the inspection report. If you included an inspection contingency in your offer, you'll have the option to walk away if you and the seller cannot come to an agreement about what should be repaired or compensated for.
Example: Inspection Report
Example: Inspection Report
This is an example of an inspector's evaluation of a property's plumbing.
Tip: Check for permits
Tip: Check for permits
Ask your inspector to investigate whether any permits have been pulled for the property recently. This is particularly important if it looks like any significant renovations have recently been completed. You'll want to verify that any major updates were completed with the local permit office's blessing.
Should I ask for repairs, financial compensation, both, or neither?
Should I ask for repairs, financial compensation, both, or neither?
The answer to this question depends largely on two things: your personal preference and the market. You'll first need to decide if it's a good idea to request anything at all given the market conditions. If so, how much is reasonable and should you have them resolve the identified issues or provide a credit? In a hot market, you may not have the flexibility to demand all defects be remedied, especially if the seller had other offers on the table. However, if you're not comfortable with the state of property, it may be worth re-evaluating proceeding to closing.
In a neutral or buyer's market, you may be able to accommodate more of your personal preferences and request property modifications or compensation. Keep in mind that any repairs requested will need to be completed before closing, which may be difficult depending on the type of issue. Larger projects may require parts to be ordered, or weather that must be warm and dry. In the case of lengthy projects, a credit for the cost of the repair may be a more reasonable request.
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