What Buyers Can Do About A Bad Home Inspection
There are many tense moments in the home buying process. You toe-tap to hear back if you're approved for a mortgage by the lender. You bite your nails waiting to hear if the seller accepted your purchase offer. You pace to-and-fro when the appraisal is being done. Then, there are the inspections. Here in Sarasota, its common to have three inspections conducted on a home: a pest inspection, a wind mitigation inspection, and a home inspection. All of these are typically included in your purchase offer contingencies and each one can be nerve-wracking. Obviously, you hope for the best, but what can a buyer do about a bad home inspection?
The Home Inspection Contingency Purchase Offer Clause
The first thing to understand is what a home inspection constitutes. Whether you buy a resale or new construction, you ought to have a home inspection. Home inspectors are experienced "expert generalists" who look at the major systems and components of a home. These include the electrical wiring, plumbing, foundation, roof, major appliances, HVAC system, and so on. The reason a home inspection is so important is to alert the buyer (and seller) to existing or potential problems.
Though most inspections are not technically pass-fail, when your pest, property and roof inspections collectively come out either squeaky clean or tragically terrible, the decision to move forward or back out is easy-peasy lemon squeezy. Similarly, when you get the place at a discount because it ‘needs TLC,’ negative inspection findings are much easier to swallow. --HGTV.com
When you submit a purchase offer on a home, you'll have the option to include certain contingency clauses. As the name describes, the deal hinges on said contingencies. So, if the home inspection reveals material defects (those which are a safety or health hazard and/or negatively impact the value of a property), you have a clean out. For instance, the home inspection report notes the roof is in need of repair, or, the HVAC system is likely to fail in the near future, the buyer can simply invoke the home inspection contingency and walk away with his or her good faith money deposit.
What Buyers can Do about a Bad Home Inspection
Of course, the fact you submitted a purchase offer and paid for a home inspection clearly demonstrates just how much you like the house. You want to buy the home, but now, you've learned the home inspection has uncovered a substantial problem. While it might seem there's nothing you can do when you first hear the news, that's not the case. Though, it won't necessarily be easy to get the seller to agree. Here are things buyers can do about a bad home inspection:
- Request the seller make repairs. Your first inclination might be to have your buyer's agent request the seller make any necessary repairs, and, that can be a viable option. One reason this might work is because now the seller is aware of the problem, he or she must either make the repairs, or, back out of the deal but disclose the problem to other potential buyers. That will require lowering the asking price or convincing another buyer to absorb the cost.
- Ask for a closing cash concession. If the seller isn't keen about making the repairs, but you still want to buy the home, you could ask for a closing cash concession to either pay in-part or whole, the amount of the repair cost. This could be a more feasible option if the seller is on a strict timeline because of buying another property.
- Renegotiate your purchase price offer. Something similar to the above option is to renegotiate the purchase price. You could have your buyer's agent attempt to get the price down so you'll have the cash to make the repairs yourself after you close escrow.
- Walk away with your earnest money deposit. While this certainly isn't something you want to do, it might be something you have to do. It could be the seller won't cut any type of deal and you don't want the headache of dealing with the problem yourself. Of course, if you do choose to walk away, you'll do so with your earnest money deposit. If you do walk away, keep an eye on the listing while you continue your house hunt to see if the seller drops the price enough to make it worthwhile to go back with another purchase offer.
- Get at least three quotes from licensed contractors. Another option is to forgo the home inspection contingency, buy the property, and then make the repairs after you close on the home. If you do go this route, be sure to get three quotes from licensed contractors before you drop the contingency and proceed with the purchase. You should know the extent of the problem, how much it will cost to fix, and how long it will take to repair.