What Is An Inspection Contingency Clause?

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In a competitive housing market, you might be tempted to skip a home inspection so that the sellers like your offer more. Let's talk about some of the details before you decide to skip the inspection. We'll talk about how you can use the home inspection contingency and how it can look out for your best interests.

What does 'contingency' mean here?

With a home inspection contingency, the offer is based on how the home inspection turns out. An inspection contingency gives the homeowner a certain number of days (usually 7–10) to respond to anything found in the inspection that they don't agree with. This makes sure that the buyer can get enough information to make an informed decision about what to buy.

The rules for home inspection contingencies vary by city and state. Talk to your lender and a real estate agent about your plan for buying a home. Making sure you follow all the rules and requirements needed to buy a home. In the end, as a buyer, you need to pay close attention to what is written in the purchase agreement.

Buyers are protected by contingent offers when common problems come up. These problems can be big enough to make a buyer decide not to buy the house, or they can cause the contract to be renegotiated. In some cases, the buyers can take their earnest money and leave.

How does the inspection clause work?

A "due diligence contingency," which is another name for an inspection contingency, gives the buyer the right to have the house inspected within a certain amount of time. Depending on what the home inspection finds, the potential buyer can either negotiate repairs or back out of the deal.

A good inspection contingency should say how long a buyer has to get an inspection done and make objections. It should also say what happens if the buyer does want to make objections. Most contingency clauses give sellers a certain number of days from the time they are asked to make repairs or lower the price of the sale to agree or refuse.

What is included in the home inspection?

During a standard home inspection, the home's structure, appliances, and major systems will be checked to see how they work. This means checking the foundation, roof, attic, major appliances, electrical, plumbing, and heating, ventilation, and air conditioning (HVAC) systems.

On average, it takes between 2 and 4 hours to do a home inspection. As the buyer, you should be there when the home is inspected. This is the perfect time to ask questions about the house.

The inspector's professional opinion of the home's condition, along with photos and suggestions, will be in the report. The following will be in most inspection reports:

• How each problem they wrote down was doing: Safety issues, a major flaw, or a small flaw.
• Appliances and systems that need to be replaced or fixed are suggested.
• Any recommended repairs, upgrades, or maintenance that needs to be done right away or on a regular basis.

Based on home inspection checklists for buyers, we've put together the following list to give you an idea of what to expect.

Checking the outside

An inspector will look at the whole outside of the building. This includes crawlspaces, attics, additions, and so on. The following things will probably also be on your inspector's list of things to look at:

• Walls: The way the outside walls are built can tell you a lot about the foundation and the inside. The inspector will look for siding that is broken or missing. Check for cracks and signs of settling. The inspector will look at the soil around the house to make sure there aren't any big leaks or pests.
• Foundation: The inspector will probably walk around the building to look for low spots in the soil, bad grading, and other problems. If the foundation isn't visible, the inspector will look for other signs that there might be a problem. A skilled inspector will look for cracks and gaps and suggest what should be done.
• Roof: Water can get into a home without warning if shingles are loose or missing, if they were not put on correctly, or if vents and pipes are broken or cracked. The home inspector will take note of any places where water could easily get in.
• Garage: The home inspector will check to see if the garage door works. They will take note of any noises, check the framing if it can be seen to make sure it is properly sealed to keep out pests and water, and look for proper ventilation to make sure no one accidentally gets sick from carbon monoxide.
• Grading: The inspector will try to figure out if the land slopes away from the house the way it should. If the house has settled and needs to be leveled, an inspector's sharp eye could stop big problems from happening as the house ages.

Checking the inside

Everything inside the house, from the electrical system to the water pressure in the sinks, will be checked during the interior inspection. Here is a short list of some of the things your inspector might look for:

• Electrical systems: To start, the inspector will find out what kind of wiring is in the house. They will check the outlets and make sure that the ground fault circuit interrupters in the bathrooms, kitchen, and garage are working.
• HVAC: The inspector will find out what kind, how big, and how old the home's furnace and air conditioner are. Next, they will check to see if they work right and look for a record of service. The inspector will check the duct work as best they can to see if there are any places that could have leaks or a lot of debris blocking air flow.
• Plumbing:  Inspection will start by figuring out what kind of pipes are in the house. They will check the water pressure in all the faucets and showers. They will also look under sinks and in cabinets for slow leaks or problems that could happen with the plumbing. Ask the inspector where all the water shut-offs are in case you ever need to turn off the water in an emergency.
• Fire safety: The inspector will check all smoke and carbon monoxide detectors to make sure they are working well. If there is an attached garage, the inspector will make sure that the wall between the garage and the house is in good shape and that it hasn't lost its fire rating.
• In the bathrooms, inspectors look for leaks, toilets that are properly locked, and enough air flow. Bathrooms can get damp and wet, so ventilation is very important to keep mold and mildew from growing.
• Ventilation in the laundry room: In the laundry room, the inspector will make sure that the dryer's exhaust system is properly vented and clean.
• Water heater: The inspector will find out how old and how well the water heater is, and how soon it might need to be replaced.
• Appliances: Most home inspectors won't test things like the coffee maker or air fryer, but they will want to make sure the dishwasher works and the stove gets hot.

How to deal with the home inspection results

When home buyers and sellers get the results of the home inspection, they can do a number of things.

Result: Fixable Issues

If the home inspector finds a few things that worry you, you can ask the seller to fix them, lower the price, or give you money at the closing so you can fix them yourself. This is where a detailed report on the home inspection can help with the negotiations.

For example, a home inspector finds signs of damage from termites in a room that can be used all year round. The buyers would then tell the sellers about the problem and ask them to have a pest inspection done to make sure there isn't a current infestation. The sellers agree to an inspection for pests, the house passes, and everyone is happy to close on the house.

Result: Significant Issues

Not every time a house is sold, the deal is closed. In our last example, the sellers paid $250 for a pest inspection so that the buyers would feel safe. Most of the time, buyers back out of a contract because the house needs more expensive repairs, like a new roof or foundation work.

Let's look at another case. You really like a house, so you have it checked out. The inspector finds that there has been a slow leak from a bathroom on the second floor. This has caused a lot of mold and mildew to grow. The repairs could cost up to $15,000 and take up to 6 weeks.

You can ask the seller to lower the price or give you a credit at closing, but do you and your family have 6–8 weeks to wait for repairs? Many buyers would back out during the inspection period to avoid the chaos of construction.

How and when to waive an  inspection clause

There are times when you might want to give up your right to a home inspection. Even sellers want to be sure. It could help you win a bidding war if they can be more sure that your offer will get to the closing table because it has less conditions. But skipping a check is dangerous.

You should know that if you do this, you will be responsible for any repairs that need to be done. You have to decide if the house is worth the extra money you might have to spend on repairs if you give up this condition.

If you like the house in a seller's market but don't want to give up your inspection contingency, you can sweeten your offer by paying a certain amount more than the appraised value or offering to pay all or part of the closing costs that sellers usually pay for, such as the real estate agent's commission.

In conclusion: inspection contingency is your friend

You'll have to spend some time and money on a home inspection, but you'll be glad you did it. A home inspection can help you avoid buying a house that could turn out to be a nightmare money pit. It can also give you and your family peace of mind that your new home is everything you hoped for.

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