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In this post, I walk you through the process of getting your home inspected after you have a buyer for your home.
This is an essential contingency in the contract, and you need to know how it works.
You can either watch the video below or read the full transcript that is just below the video!
In this video, I want to tell you everything you ever wanted to know about the home inspection contingency and how it will apply to you when selling your home on your own as a for sale by owner with one of my flat fee MLS listing plans.
To start, if you recently entered into a contract to sell your home.
After all that hard work of staging your home to sell, having strangers wander around your home and judging it critically, tense negotiations with buyers and ultimately accepting a contract, you have entered into what is called escrow.
This is an important milestone. However, keep in mind your house is not really “SOLD” yet!
Home Inspection Contingency
This is where the conditions of the contract called “contingencies” have to be removed in order for the contract to really be binding.
First the most common type of contingency you will be up against is the home inspection contingency.
I’m going to walk you through what to expect and what to watch out for in order for you to successfully get past this phase and get much closer to REALLY selling your home and getting to closing!
In order to understand how the inspection contingency applies to you, the contract should always be your source of information.
Typically, I have seen most agents put a 7, 10 or 14 day inspection contingency into the contract.
This is usually calendar days and not business days, and the clock starts ticking as soon as the contract is signed by both the buyers and sellers.
As a seller, you don’t have to do much at first.
The buyers have the responsibility of contacting a professional home inspector, scheduling the inspection and paying for the inspection.
Depending on what type of inspections were agreed to in the contract, there could be multiple inspectors doing inspections.
The most common are the general home inspection, well and water inspection, septic inspection, radon testing, swimming pool inspection, pest and termite and lead testing.
While the buyer is responsible for most inspection costs, the seller typically has to pay for some items that have to be prepared before being inspected.
Such as pumping of the septic tank, opening up a pool or dewinterizing a vacant house.
Unless specified differently in the contract.
Again, always refer back to the contract.
Keep in mind, usually the inspection will take place without you the sellers being at the home.
Even if you are selling your home without a real estate agent.
During the inspection, it is really a time for the buyers to get to know the home and understand it’s structure, mechanics and overall condition and having the sellers present will distract from that happening.
Depending on the size of the home and amount of inspections you should plan on being out of the home for about 4 hours.
What Happens After Your Home is Inspected?
In about a day or two after the inspection is complete, the home inspector will deliver the final report to the buyers.
The buyers will then review the report and take a look at what defects the home inspector found.
If the buyers are uncomfortable with any of the defects found, they will request, in writing, that the sellers remedy those items before close.
Here is a quick tip for you that you may not be aware of when selling your home as a for sale by owner.
The buyers will also have to provide the relevant pages from the report that detail the inspection items in question.
However, they are not obligated to provide you the full report because it is the property of the buyers, but some will do so anyway.
Once the buyers put you on notice about any items they want fixed. You have 3 options.
1) Accept to do all the work that they requested
2) Accept to do some of the work that they requested
3) Deny to do any of the work they requested
This is where you will be negotiating with the buyers, either directly with them or through their real estate agent.
My advice is to keep a level head, put yourself in their shoes and try to be reasonable, but don’t let them bully you.
Always keep in mind that any major items will be a problem for most buyers and you should try to make the deal you have in front of you work.
Some People Use the Home Inspection Contingency Wrong
In My Opinion, I believe that a lot of people use the inspection contingency incorrectly and they may try to take advantage of you because you are selling your home without a Realtor.
They try to negotiate for minor items instead of just major defects such as foundation issues, leaking roofs, non-potable water and so on.
However, the important thing to note here is that the buyer does have the right to terminate the contract and receive their deposit back if they are not happy with the results of the inspection.
This is what is called leverage in negotiations.
But you also have leverage, you know they want the house and they just spent their hard earned money to get your house inspected.
But what you don’t know is what their breaking point is.
So, like I said before the best advice I can give is to try to be reasonable and figure out what you would be willing to do in order to make the buyers happy while still achieving your goals that will make you happy.
What Will Ultimately Happen After the Home Inspection?
At this point you will either come to an agreement with the buyers or you will chose to terminate the contract and put your home back on the market to find another buyer.
But I hope that’s not the case.
If you do agree to perform any of the requested repairs, most buyers will request that the seller provide receipts and proof of payment from a licensed contractor.
However, if you are going to be doing any of the work yourself, it needs to specifically say that when the addendum to the original contract is signed that states the scope of repairs everyone agreed to.
Otherwise, it could become a sticky point and jeopardize you getting closer to that goal of closing on your home.
Home Inspection Contingency Timeline<
Below is an example of the timeline that shows you the home inspection contingency play out.
June 1st – contract signed by both buyers and sellers
June 3rd – buyers contact home inspectors and schedule the inspections
June 7th – home is inspected
June 9th – report is delivered to the home buyers
June 9th-12th – buyers discuss the report and determine if any items they would like the sellers to remedy
June 14th – buyers real estate agent writes up a “Notice of Failed Inspection” and sent to home sellers agent.
**notice that the “Notice of Failed Inspection has to be delivered to the home sellers by the date specified in the purchase contract or the buyers forfeit their right to the inspection contingency.
June 14th-17th – Negotiations between sellers and buyers take place to determine the scope of repairs to be made
June 17th – agreement between the home buyers and sellers is signed or the contract is cancelled if agreement can not be reached
That’s about wraps it up for the home inspection contingency.
I hope you found this information useful and are you are able to apply it to your situation when selling your home with one of my flat fee MLS listing plans.
If you have any further questions, feel free to contact me directly, through my website and I will get back to your right away and see if I can help you.