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Here’s Why The Home Inspection Is The Most Important Part Of Buying A Home
The home inspection contingency is an important safeguard that allows homebuyers to identify problems with their potential new residence and negotiate repairs before the deal can close.
You’ve probably heard it said that appearances can be deceiving or to never judge a book by it’s cover. That same rule applies to houses. While you may think you have found your dream house and eagerly place an offer, keep in mind that the house could be in need of major maintenance or repairs that are hiding behind a positive first impression. In order to ensure homebuyers know exactly what they’re getting into with their potential new residence, a home inspection contingency is a standard part of escrow.
The home inspection is meant to be a safeguard for buyers. During the general inspection, the home is checked for possible problems that may not be obvious to the untrained eye. A thorough inspector will check that the home’s plumbing, electrical, and HVAC systems are up to code and in working order, as well as identify where maintenance and repairs are needed. Depending on what is found during the first general inspection and the homebuyers’ preferences, follow up inspections may need to be completed to check the condition of the roof, drainage systems, or the home’s foundation, or to look for mold.
With the home inspection contingency in place, the homebuyers are allowed to ask the seller for credits, a reduced purchase price, or for the seller to handle any repairs or maintenance that are identified during the inspection. If the seller is not willing to negotiate or make the necessary repairs, the homebuyer can back out of the deal with no financial penalties. Alternatively, the homebuyers can also decide to take the house as is, but will be aware of potential problems or repairs they may need to handle in the future.
In today’s competitive market, many desperate homebuyers are agreeing to waive the home inspection contingency to seem more appealing to sellers who are being bombarded with offers. This is attractive to sellers because it expedites the deal by getting rid of the time it takes to have the inspections done and to renegotiate. The homebuyers are essentially throwing away their bargaining power and saying they will take the house as is, which means they are less likely to back out of the deal due to a poor inspection. If homebuyers decided to back out after waiving their home inspection contingency, they would be at risk of losing their deposit, which is often a substantial amount of money.
That said, a homebuyer can still have an inspection done on their new home even with the contingency waived. This will give them an idea of what to expect once they move into the home and start planning how necessary repairs and maintenance will be handled. However, this won’t save any time in escrow and the homebuyer will not be able to negotiate for a better deal if the inspection uncovers any expensive surprises. A better strategy that would protect homebuyers and still seem appealing to sellers would be to expedite the home inspection process. For example, the standard inspection time limit for real estate contracts in California is 17 days. If the homebuyer can reduce that time to a week or 10 days, their offer may be more attractive to sellers because the deal is expedited. However, the buyer will still have some contractual protection if the inspection doesn’t go well.
While the point of taking risks and waiving the home inspection contingency is meant to make an offer seem more appealing, sellers may want to think twice about accepting this kind of deal. If the inspection is skipped entirely, it’s not unreasonable to think that a homebuyer that finds massive damage or an expensive repair may try to come after the seller once the deal is done. If the issue is a surprise and wasn’t previously disclosed, the buyer may seek legal action to recoup some of the costs from the seller. This will only lead to spending money on legal fees, stress, and hassle. In this way, the home inspection contingency is also a safeguard to the seller because it allows both parties to settle grievances in an acceptable manner before the deal is done. Home sellers can also avoid conflict by submitting a thorough home disclosure to be honest and upfront about any problems the house has had. Home sellers can also opt to have a home inspection completed prior to listing the house, allowing them to identify and fix anything that could cause problems once the home is in escrow before it has a chance to hurt the deal.
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