During the next ‘phase’ of the contract a buyer may undertake additional steps to inspect the property to ensure they are getting exactly what they expect.
A contract may include one or more contingencies including property, appraisal, home sale, and/or financial.
A contingency clause gives the buyer a legal way to back out of a contract under circumstances established by both parties. For example, a home sale contingency means that the buyer will purchase your home as long as he is able to sell his house.
If the contract includes a property contingency, that means the buyer will most likely want to conduct their own inspections. The buyer will schedule and pay for these inspections; their real estate agent will confirm in advance that the inspection dates and times work for you. Buyer inspections typically happen within the first week of contract acceptance.
As mentioned earlier, performing all necessary inspections in advance will tend to mitigate any unforeseen property contingency issues. This is why Dawn strongly encourages all of her clients who are selling a home to conduct thorough inspections before the property goes up for sale. It will save time and money in the long run.
It is customary for only the buyers, their agent, and the inspector to be present during these inspections. The buyer’s agent will use the key in the lockbox for entry. An inspection can take anywhere from one to two hours for a condominium or townhome, and upwards of four hours for a large single family home.
Sellers should not be home when these inspections occur, but there are some things you should do to prepare. Make sure your home is neat and clean. Treat the inspection just like you would a private showing by putting away dishes, making beds, and the like. Again, it is also wise to take pets with you or crate them while inspections are taking place.
Once the inspections are complete, the inspector will generate a written report. Generation of these reports can take from one to two business days. It will take additional time for the buyer and their agent to review them. If the reports show anything unexpected that wasn’t uncovered in our initial inspections, the buyer’s agent may ask for repairs to be made or credits to be issued; we then go into negotiations and hopefully arrive at a mutually acceptable agreement.
All agreed-upon repairs should be completed prior to the property legally changing hands, preferably before the final walk through. It is also important to provide the buyers with documentation in the form of vendor receipts showing the work was completed and paid in full.
If a major issue is uncovered during an inspection, the buyer has the legal right to back out of the contract and their earnest money deposit returned in full.
If the inspections come back clean, or a repair credit is negotiated and/or the repair work is complete, the property contingency is lifted. Again, it is possible that an extension may need to be drawn up, especially if the removal of contingency date is approaching and the buyer’s agent doesn’t have the necessary information to remove it.
Now that we’ve reviewed buyer inspections, let’s discuss what occurs during the appraisal. Click here for details on the buyer’s appraisal process.
