YOU ACCEPT AN INSPECTION CONTINGENCY?
Professional Home Inspections Protect Seller And Buyer
Inspection contingencies have become a standard part of purchase offers
nationwide, at least until recently. In some very active real estate markets,
however, a reverse trend is taking place. Home buyers are foregoing professional
inspection contingencies to make their purchase offers more enticing to
sellers. That sounds good to sellers. Why jeopardize their home sale with
an inspection that can be avoided?
The answer may be in the fact that post-settlement lawsuits are on the
rise, brought by buyers who've encountered problems in homes they purchased
without a professional inspection. In the last 10 years, most states have
nearly gutted their caveat emptor (Latin for "buyer beware") types of
laws, giving home buyers more protection through property-disclosure and
Material defects are a definite disclosure. However, many sellers don't
know what qualifies as a material defect. (For example, if the basement
floods during heavy rains, but the seller paints the basement to hide
all evidence of this defect, the buyers won't be aware of this material
fact-a fact that should be disclosed.) Many sellers aren't even aware
of the defects their homes. More and more, they're having to prove their
ignorance in court, after settlement.
Playing It Safe
What's a home seller to do? One approach is to pay for your own inspection
prior to putting your home on the market. That way, you know exactly what
problems the home has, and you can take care of them before sale time.
Or, you can show your inspection report to home buyers, selling your home
A third approach: Accept a home-inspection contingency but avoid the
"general contingency" variety. This clause stipulates that the contract
is contingent on the buyer conducting a "satisfactory" professional home
inspection. It allows a certain number of days for the buyer to conduct
the inspection and report back to the seller, and allows the seller time
to respond to the inspector's findings. With a general contingency clause,
if the buyer does not like anything in the inspection results and chooses
not to go forward with the transaction, the contract is null and void.
Simple as that.
Instead, opt for a "specific contingency," which spells out particular
criteria that must be met before the buyer can back out, such as the seller's
failure to fix a problem identified by the inspection. The buyer can't
just walk away for any reason.