When it comes time to buy a home, the home inspection may be one of the most important parts. A home inspection is meant to show buyers any damages or issues in the home that may not have been previously apparent. So what do you do if you get the results of the home inspection back, and they're crushing? Thousands of dollars in repairs, maybe tens of thousands. Your gut instinct may be to run from the property, but this might not be the best or most necessary decision. Take the time you need to get informed, and you will be able to make an educated decision on what route is best for you.
Request an Extension
When the seller accepts your purchase offer, you will negotiate a timeline that works for both parties. You may have expected that you would not need much time to get the home inspection and deal with the results and only gave yourself a few days to a week. A problem that requires a lot of repairs or takes time to fix needs a cool head and more padding in the schedule. The first thing you should do is ask your real estate agent to request a short extension so that you can do some research into the complexity of the problem and how it needs to be resolved.
Get the Details
With the time you need to figure things out, you can get to work making a plan to deal with the results of the home inspection. Ask the inspector to provide you with as much information as possible, including recommendations for contractors or businesses that can perform the repairs. Get a sense for a reasonable timeline for removal of damaged equipment and the installation of new materials or appliances. Request bids from more than one company, with three being a preferable number if there's time. This way, you can compare prices to get the best deal.
The Importance of Including an Inspection Contingency in Your Purchase Contract
The inspection contingency is a clause in the home purchase contract that enables the home buyer to renegotiate the purchase in the event that the home inspection turns up problems with the house. The home buyer may also negotiate a repair to be made before escrow will close. If the home seller will not make home improvements or reduce the price of the house, then the home buyer may cancel the contract without incurring a financial penalty.
The inspection contingency is a home buyer's only protection against big maintenance problems and hidden issues that may not be apparent during the initial tour. Virtually all pre-owned homes will have something wrong with them, but determining what is wrong can be difficult or impossible without an inspection. This is why an inspection contingency is so important.
Negotiate With the Seller
If you know how much the repairs will cost, you can come back to the table with the seller and determine who will take the share of the responsibility. You may already have set buying contingencies that place the burden more on you as the buyer, or the seller. Depending on the severity of the issues, you may need to ask to renegotiate these terms. After all, if you agreed to manage most of the repairs, that may not be a fair agreement if the bill comes to many tens of thousands of dollars. Make a fair estimate of what you can handle, and ask the seller to do the same.
Make a Reasonable Decision
Ultimately, you have several choices you can make related to the results of the home inspection report. They include:
- Asking the seller to pay for the repairs
- Assuming the expenses yourself
- Requesting a credit or exchange if you take care of the problem
- Walk away from your purchase offer
The last option is generally considered the most extreme, because you will probably lose any earnest money you put into the property up to this point. As such, unless the defects brought up in the home inspection report are quite severe, you may be better off trying to find some middle ground before you execute this choice.
Minor problems on the home inspection are common. Nasty, expensive issues are an entirely different circumstance. With these four steps, you can come up with a plan of action, negotiate your position with an Arvada seller and make an educated decision about your intent to purchase the property.