The home inspection contingency gives the buyer an option to cancel the home buying deal given that the home has a major flaw. The laws about this contingency are different across the United States. Most states treat it as a part of the purchase contract, allowing the buying party to renegotiate or cancel the deal. In some states, a home inspection can be done before the two parties agree to any kind of contract.
Why Is a Home Inspection Contingency Important?
The contingency allows the buying party a week or two, or a period specified at the time of negotiation, to conduct the inspection.
It offers the best chance to a buyer to find out the flaws in a home they are going to purchase. The buying party also has the option to back out of the deal without paying any penalty fee or losing the earnest money. They can also use the problems to negotiate further and lower the price. It is wise to cancel the contract if the problems are big such as foundation issues or mite infestation.
Most sellers will happily reduce a few thousand dollars from the asking price if you agree to exclude the home inspection contingency from the purchase contract. This contingency along with mortgage, appraisal, and title contingencies are major factors in most real estate deals.
What Does a Home Inspection Cover?
The inspection is likely to take 2 to 3 hours on average. An experienced inspector knows the key areas of a house and reports his/her findings in details. The inspector should clearly mention in his report whether the issues are major or minor in nature and if you need to replace or repair anything to fix it. He will also note down whether some components are about to expire within a few months or years. Above all, a good home inspector will never fail to report any safety issue.
An experienced inspector will also give suggestions about maintenance of the machinery and components that you should perform to keep everything in good health for years to come. The best practice for you as a potential buyer is to take the tour with the inspector and ask him questions in person.
Remember that a home inspector will give an overall report about the condition of the home. He will not provide any special inspection services such as electrical, chimney, soil stability, foundation & basement, pest & termites, and others. For example, he will tell you that there is a problem with the foundation but you have to hire a specialist in that field to learn the exact nature of the problem.
Does Home Inspection Provide Value for Money?
A home inspector will charge around $350 on average, and the cost will vary depending on the location and size of the home. Some first-time homebuyers may think of skipping this drill in their quest of saving money. Many first-timers may even think of not including the contingency in the contract in the hope of lowering the asking price.
Don’t make this blunder! Even if the house is free of any major defect, you have to have a clear idea of what you need to deal with. Taking precautions will save you from dealing with major repairs later.