What is a Home Inspection Contingency?

What is a Home Inspection Contingency?

Published On: December 15, 2021|Categories: Blog, Buyers, Home Buyers|Tags: , |

What is a Home Inspection Contingency?

Real estate agents often build home inspection contingencies into their clients’ contracts. But what are they, and how does this type of contingency affect you?

What is a Home Inspection Contingency?

A home inspection contingency is a condition that real estate agents often include in their clients’ real estate purchase contracts. This condition says that if a home inspector discovers major issues with a home, the prospective buyer can change their mind about the deal and walk away.

Most buyers do hire a home inspector. It’s just smart to do so, because without a professional opinion on a home, buyers can’t really know what they’re getting into.

What Happens if the Home Inspector Finds Major Issues With the Home?

An inspector’s job is to examine all the major components of a home and look for issues that may affect the buyer’s enjoyment of the space, cost the buyer money to fix, or make the home uninhabitable. After an inspection, the inspector turns in a detailed report to the prospective buyer.

Buyers usually use these home inspection reports to negotiate with sellers. Whether the issues on the report are minor or major, buyers can ask sellers to lower the price, repair the issues, or offer them a credit so they can repair the issues themselves.

If an inspection report shows major issues that a buyer considers to be deal Breakers, the buyer can walk away from the transaction without penalty.

What Happens to a Buyer’s Earnest Money Deposit?

If the buyer’s real estate agent has built a home inspection contingency into the real estate purchase contract, the buyer can walk away with their earnest money deposit. In this case, the seller does not get to keep the earnest money.

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