When a new homebuyer searches for a dream property that’s within their budget, they often feel like they have to compromise on many items. And it is true. When you don’t have an unlimited amount of money, you have to make priorities and set reasonable goals. However, inspection contingency shouldn’t be one of those compromises.
In this article, we’ve compiled five reasons why you should always check if the house you are about to buy has any major issues. But, before that, let’s unpack the definition and possible benefits of the inspection contingency.
The sales agreement is a contract between the seller and buyer. This document provides a way out for both parties, and you sign it upon offer acceptance. In that contract, there can be many contingency clauses to give you the opportunity to back out of the sale in case something shows on the property research. Clauses can refer to inspection, title search, appraisal, etc.
Although each clause is important in its own way, waiving inspection contingency could result in losing a lot of money in the future. But what does it mean to have a contingency clause in your sales contract?
Having an inspection contingency clause means that before the sale is final, a professional and unbiased inspector will go through a property and check everything from the ground up. They will come with a checklist and write all issues, big or small.
From water damage to structural problems, there could be any number of things wrong. No property is perfect, and sellers usually disclose minor problems. Inspection should show you if there have been any undisclosed issues that could cost you hundreds or thousands of dollars once you become an owner.
Having an inspection contingency gives you the option to back out of the sale and get your earnest money back If the inspection shows undisclosed defects. You can also make a deal with the seller to have those issues resolved before the sale is closed.
Contingencies are clauses that guard the earnest money against some unforeseeable event. If you, as the buyer, do not include them in your sales contract, you agree to go through the sale no matter what issues arise or to lose your earnest money if you want to back out.
The thing with contingencies is - sellers don’t like them as much. So, when the market is hot, and there are several offers on one property, the seller has the power to choose the one with as few contingencies as possible.
In times like these, buyers become desperate and waive contingencies to make sure they get the house. However, in some cases, this could bring more headaches than a few more weeks on the market would.
The inspection contingency is one of the first contingencies that gets waived when the demand climbs high. People visit the property and think to themselves: what could possibly be that damaged?
What they don’t know is that water damage can be easily covered with a fresh coat of paint - but that’s only a short-term solution. Similarly, sellers can cover any number of problems by hiring a professional stager.
The main benefit of waiving an inspection contingency is that your offer might get picked out before all others. If the seller has a lot of offers over the asking price, they will not necessarily choose the highest one but rather the one that will be the quickest to resolve.
You might also want to buy the house as fast as possible, and the inspection is not always as fast as you’d want. Not to mention that the pre-sale repairs can sometimes take weeks, if not months.
Some issues can be glanced over. However, there are some things that could seriously compromise your safety. Water damage, exposed electrical wires, loose screws, structural problems - you cannot ignore those things for a long time.
It is not all about aesthetics, especially when it comes to where you need to feel the safest and not worry about it all crumbling down one by one. An inspection contingency ensures that you don’t buy a house that could affect the comfort and safety of your family negatively.
If you don’t include an inspection contingency in your sales agreement, you are risking buying a house that needs repairs that you might not be able to afford. Sure, some things are easy to fix, but home renovations are not a cheap endeavor.
It is better to know what you’re getting into before you commit to a property that might take thousands of dollars to be safe and issue-free.
So, you are buying in a hot market, overpaying for a property, and waiving contingencies just so you can get accepted? Well, the tables might be turning, and by the time you want to sell it - your buyers will not waive their inspection contingency.
That’s right, in the market that is not as hot and the demand is waning, contingencies are a standard deal. This means - you might not be able to sell the house and get a profit unless you invest those thousands of dollars that we mentioned earlier.
Having electrical problems could, in the worst-case scenario, lead to accidents. However, there could be smaller repercussions, such as power outages and other failures. These things can cause breakage of house supplies, water heaters, air conditioning, and other electrical household goods.
The worst thing about skipping an inspection contingency is that you could wind up living in a house that you hate, not being able to enjoy family moments. Those issues that you overlooked or ignored at the beginning might haunt you later.
Getting overwhelmed by the amount of work that needs to be done on a property can cause you to want to move. However, moving and selling a place with issues is, again, hard and sometimes impossible.
Inspection is considered due diligence on an investment, so the buyer is the one paying for inspection costs. If inspection shows issues, the seller and the buyer negotiate on the level of repairs that need to be done before the sale closes, and those repairs are the seller’s obligation.
The seller can cash out before the sale, or they can agree to reduce the asking price and have the buyer take care of it. Negotiating the repairs can be stressful, but agents usually try to find common ground.
When selling a home, particularly an old property, you want to avoid paying for repairs and sell it without the hassle. Inspection shouldn’t be waived, but there is a way to skip the repairs. Your solution is SleeveUp Homes. We buy properties in all kinds of states, as-are, and we do it fast.
Not to mention - we offer top dollar, at least ten grand more than others would. We help you skip additional costs, such as agent fees, repairs, and staging. But, don’t take our word for it - request an offer and see it for yourself.
If you want to sell fast and are worried about how long the traditional process takes, and the commission and fees involved, consider working with SleeveUp Homes.