Know Your Home Inspection
Once you’ve found a home and have a ratified contract, meaning both parties have agreed to all the terms. There are typically a number of contingencies that need to be satisfied before the contract is legally binding and can go to settlement. The three main contingencies are the home inspection, appraisal, and financing. Today, we’re going to discuss the home inspection contingency! The home inspection contingency can differ from state to state, so the way I’m going to discuss it will apply to Virginia and Washington D.C.
There are three parts to the home inspection contingency:
• The inspection period.
• The negotiation period.
• The purchaser’s election period.
The inspection period is typically a 7-day time frame where we get to hire a professional home inspector to inspect the whole property. They don’t look for the cosmetic issues but they look at the bones of the home. They will check all the appliances, outlets, plumbing, HVAC system and much more. The inspection itself can last anywhere from an hour and a half to three or four depending on the size of the house. We will be there with the inspector for the inspection so they can explain the findings and also give you general information about the house (age of systems, maintenance tips, etc.). At the end of the inspection, we will have a 30-page document with photos and information about the house including what’s wrong with the property. No home is perfect.
Once we get the full report, we have two options. We submit the report with a written addendum listing specific existing deficiencies that we would like the seller to repair or we submit the report and a notice voiding the contract. The later option isn’t too common but it’s certainly an option if you find the results of the inspection to be unsatisfactory. If you cancel the contract due to the home inspection, you get your earnest money deposit back and walk away free and clear. Now let’s focus on the option that a vast majority of people take, submitting a list of repairs. Once you’ve submitted your list of repairs, you enter the next phase, the negotiation period.
The negotiation period is typically 5 days where the buyer and the seller can go back and forth as many times as they want to try to come to an agreement on the repairs that should be done. Every situation is different but again, a vast majority of the time there is a meeting of the minds. The seller can also opt to give a monetary credit at settlement if they don’t want to deal with fixing things themselves. If both parties agree and sign off on the repairs, then the home inspection contingency is removed.
Purchaser’s Election Period
If both parties cannot come to agreement after the negotiation period, we enter the purchaser’s election period. This is typically a 2-day period where the purchaser can void the contract. If the purchaser chooses to void the contract during this phase, they get the earnest money deposit back and can walk away free and clear. It is pretty rare that the buyer and seller can’t come to an agreement but it does happen.
The home inspection is a critical part of the home buying process. It’s extremely important that you do a home inspection to see exactly what it is you are buying. The inspector has a much different eye than you or I. They are looking for things that we will certainly have missed on our tour of the home.
If you’re thinking about buying a home soon, get in touch with us today! We love the opportunity to work with all buyers and look forward to finding your next home!
For more information on the buying process for First Time Home Buyer’s check out our blog series HERE!