if you are buying a home in Scottsdale, your real estate agent will talk to you about putting a home inspection contingency in your contract. But is that always a good idea?
If you are buying a home in Scottsdale, your real estate agent will talk to you about putting a home inspection contingency in your contract. But is that always a good idea?
What Are Contingencies in a Real Estate Contract?
To understand whether you should waive your home inspection contingency, you first must understand what contingencies are. In real estate, contingencies are conditions that must be met in order for the transaction to go through. The contingencies may apply to the buyer or the seller, or to other conditions. The most common conditions include the following:
- Home inspection. A home inspection contingency says that the buyer has the right to hire a home inspector and to walk away from the transaction if the inspector uncovers issues the buyer can’t live with.
- Home appraisal. A home appraisal contingency says that if the home appraises at a lower value than what the seller is asking, the buyer can cancel the deal.
- A financing contingency says that if a buyer is unable to secure financing after a good faith effort, they are not responsible for purchasing the home anyway.
Should You Waive Your Home Inspection Contingency?
usually, it’s not a good idea to waive your home inspection contingency. If you do so, you won’t have any way of knowing what types of issues the home has before you buy. You also won’t have a home inspection report that lets you negotiate with the seller; many buyers use the report to come up with solid negotiation points.
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Why Do Some People Waive the Home Inspection Contingency?
Usually, people don’t waive the home inspection contingency unless they’re trying very hard to get the seller to select their offer over other offers. Waiving the contingency can help speed up the sale, but it leaves the buyer in a sticky situation – without a home inspection, the buyer has no professional opinion to use to determine whether the home is a good buy.
If you’re considering waiving your home inspection contingency to get a seller to accept your offer, you should talk to your real estate agent. It may not be necessary, and in some cases it’s a bad idea. Your agent can give you the guidance you need to make the right decision.
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What Happens if Your Inspector Finds Issues You Can’t Live With?
If you have a home inspection contingency and your inspector discovers issues you are not willing to live with, you have a few options. First, you can ask the seller to repair the issues and provide you with proof of the repairs before you sign the dotted line. Second, you can ask the seller to lower the asking price of the home so you can afford to make the repairs yourself. Third, you can ask the seller to give you credits toward making the repairs. Finally, you have the option of walking away from the deal and, if you have a home inspection contingency in your real estate purchase contract, you can generally keep your earnest money deposit rather than forfeit it to the seller.
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