Do you want to learn the biggest reason to make an offer contingent on a home inspection?
As a home inspector, I have seen so many house problems and defects it would make your head spin. I have seen structural problems, roof leaks, entire plumbing system defects, and much more.
You may also want to read my guide on the 16 key questions to ask during a home inspection so you can get the most out of it.
In this guide, I will go over…
- My top reason to get a home inspection contingency
- Using the inspection contingency on an ‘as is’ purchase
- And a template of actual home inspection contingency language
Why Make Offer Contingent On Home Inspection?
The most important reason to have a home inspection contingency in your offer is to verify that the home doesn’t have a major defect. Home inspectors typically find 100+ minor items, but once in a while we find significant problems. If the home inspector finds issues like defective plumbing (polybutylene), aluminum electrical wiring, a termite infestation, and foundation cracking — all of these things are very costly to fix.
With a home inspection contingency, you are ensuring that you can walk away from the home (and get your deposit back) if you find a large defect.
And don’t forget that with any defect, the seller has the option first to fix the issue before you are allowed to back out of the contract. The seller may also offer to lower the purchase price instead of fixing the repair which will be up to you to accept or reject.
Read Also: How To Do A Home Mold Inspection?
Defective HVAC System Example
Let’s say the home inspection shows that the HVAC system is 25-years old, broken, and it’s leaking refrigerant. The refrigerant is outdated R-22 which is very costly (currently defunct & banned from production) and the HVAC contractor recommends to install a new system.
You may also be interested in reading my guide on things that fail a home inspection so you can prepare for potential repair negotiations.
Well, now the seller has the option of installing a new HVAC system, giving a discount off of the purchase price — or you can walk away from the purchase and get your deposit back.
If you didn’t have a home inspection contingency, it doesn’t matter if the HVAC system breaks, you will still be obligated to go ahead with the purchase or lose your deposit.
What Does Contingent On Home Inspection Mean?
Being contingent on a home inspection means that there is language in the purchase contract called a clause that states the buyer is allowed to get a home inspection as a condition of the purchase.
The buyer is allowed to get a home inspection within a certain period of time, and provide a list of requested repairs to the seller.
The seller is free to either perform the requested repairs or to reject it. If the seller rejects the repair request, then the buyer is able to back out of the contract without penalty and get their deposit back.
You may also be able to renegotiate the purchase such as the sales price based on the results of a home inspection.
Can A Home Purchase Be Contingent On An Inspection When Being Sold “As Is”?
Yes, the purchase can be contingent on a home inspection even if the home is sold ‘as is’. The only difference is that your only right is to cancel the contract — not request repairs.
The whole point of an ‘as is’ condition of the sale is that the seller doesn’t warranty the condition of the property, and that are unable or unwilling to do repairs. In this situation, if you find that the repairs or more than you can handle or desire — you can cancel the contract and get your deposit back.
Read Also: How To Do A Home Inspection For Foundations?
Offer Contingent On Home Inspection Template
Depending on your state, you are likely to have a slightly different variation of the home inspection contingency.
Your best bet is to ask a Realtor for a sample of their actual home inspection contingency to look over. Here is a sample from an actual realtor contract in the state of Maryland for a home inspection contingency…
Get A Home Inspection Contingency If You Can
Unless it is the home of your dreams, and you are in a super hot market — I couldn’t imagine buying a home without a home inspection contingency. It can literally save you from a financial disaster.
Unless you have a contractor background and know what to look for — the average person can’t spot hidden and major defects. Major house problems aren’t always clearly visible, and home inspectors are trained to find these issues. It can be a foundation problem, an attic infestation, a decaying roof, or a myriad of house problems.
And if you do make a purchase offer without a home inspection contingency, at least put down a deposit that you are willing to walk away from — and still get a home inspection performed.
It is also important to verify that the home inspector is licensed in your state (if required) otherwise it will not satisfy the requirements of the contingency.