The Sales Contract KILLER

By setting clear expectations for both the buyer and seller of real estate, home inspections can go smoothly.

The Sales Contract KILLER - The Home Inspection

The dreaded words.... HOME INSPECTION!  Officially it is called a Property Inspection and can be a number of different types of inspections such as:  Structural and mechanical, mold, environmental, radon, chimney, etc.

For the sake of this writing, we will be talking about the structural and mechanical inspection.  You know, the one where a home inspector does a visual inspection of the structure and components of a home to find items that are not performing correctly or items that are unsafe.

For some, home inspections kill deals.

Here's how it works in Anne Arundel County, Maryland (if you are in a different location, please check with your local Realtor).

1.  A property inspection contingency is included in the offer to purchase and stipulates how many days the buyer has to do the structural and mechanical inspection.  

2.  The home inspection is done within said number of days.  DEPENDING ON HOW THE CONTRACT WAS WRITTEN AND AGREED TO, The buyer has the right to:

  • Cancel the contract 
  • Ask for one or more items to be repaired or replaced

3.  The contract also stipulates how many days the buyer has to deliver request for repairs AND THE HOME INSPECTION REPORT back to the seller if there are any repairs requested.

4.  The seller has 3 choices:

  • Fix all of the items requested - the buyer would be required to move forward with the contract
  • Fix some of the items requested - the buyer has the right to terminate the contract
  • Not agree to fix any of the items requested - the buyer has the right to terminate the contract.

5.  The contract will stipulate how many days the seller has to respond to the requested repairs.

What can go wrong with home inspections?

  1. Unrealistic expectations of the buyer.  He wants to have a home with zero defects.  (PS. Good luck, there aren't any that I know of).
  2. Unrealistic expectations of the seller.  He thinks his home is perfect and if the report comes back with a defect, the home inspector must be crazy.
  3. The buyer uses the home inspection as a punch list.... clean the gutters, spackle the nail pops, trim the bushes back, etc.
  4. The seller doesn't want to fix items that the contract requires them to fix (there is a paragraph in the contract (in Anne Arundel County specifically) that requires the mechanicals to be in working order) so by contract, it would need to be fixed.
  5. The loan that the buyer has chosen may require certain things on the home inspection to be fixed.
  6. Depending on the lender and the loan type, appraisals may require certain defects to be remedied

So what is the best way to handle home inspections? Set proper expectations with the buyer and the seller of what a home inspection is, what it isn't and what some possible outcomes could be.  I've been a part of many, many very successful home inspections.  They don't have to be the sales contract killer.  

Live well and take home inspections in stride.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

G-Man February 22, 2013 at 05:14 PM
Get a descent home inspection company on your own. Do not use the buyer's recommendation nor your realtor. Do your homework.
Diane February 22, 2013 at 05:29 PM
Thanks G-Man. Your comment is very much appreciated. It is always wise to interview a few (I always recommend) three trades people to be sure you are choosing ones you are comfortable with. While the recommendation of the buyers agent could be a good one, it's always wise to do your due diligence as you are the one who will be living in the home. Great advice G-Man. Thanks for the feedback!


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