Is There a Good Time To Remove An Inspection Contingency?
Never enter into a contract with a seller without including a home inspection contingency clause. After the inspector has completed the inspection report, you\’ll find out all the defects and problems a home may have.
Once you completely dissect the report, you\’ll need to make a decision if the defects can be fixed and if the property is habitable; which party is going to take care of the repairs; and what alternatives there are when both parties are unable to negotiate a successful agreement on who foots the bill for the repairs. Let\’s review these concerns one by one:
1) Are The Defects Fixable? – Discuss the flaws with an inspector or contractor to see how much you\’ll need to invest. A sinking foundation may be irreparable, but an incorrectly installed sliding door can be fixed.
Once you determine the problem is too difficult to renovate, you need to reconsider if you\’re still interested in purchasing the property. Completing a large repair job will easily take several weeks and may force you to check out other properties. Reviews of some state regulations permit a seller the opportunity to remedy the problems before you\’re allowed to terminate the deal. If the defect ends up being virtually irreparable, you have a good chance of canceling the deal.
2) Which Party Pays For The Repairs – While it may be ideal to have the seller handle all the repairs, you need to be reasonable in your requests or the seller may decide not to sell the home to you. However, if the seller is facing a time deadline and needs to move fast, you can probably negotiate for the seller to cover more repairs as a condition of the sail. If you\’re shopping in a hot market, you\’ll have less leverage to negotiate a lot of repairs.
3) How To Coordinate The Repairs – After agreeing on who will handle the repairs, you can coordinate the services by:
a) Get The Seller To Credit You Upon Closing – Instead of the seller receiving the full purchase price, you can have the seller transfer funds to a special account to be used for repairs you\’ve agreed upon. When you\’re ready to perform the repairs you can draw money from the account to cover the costs.
b) Reduce The Purchase Price By The Cost Of The Renovation – If you can accomplish this with the seller, you\’ll benefit with reduced property taxes (if applicable) due to a lower sales price.
c) Have The Seller Be Responsible For The Repairs – Avoid this option if possible. A seller motivated to net the most money from the sale will typically use the least expensive contractor, or worse, complete the repair with the do-it-yourself approach.
d)Request The Seller Cover The Bill For Your Contractor – At first glance, this option may seem appealing, but if you run into unforeseen problems, the renovations could take longer than expected and delay your closing date.
If you\’re using traditional financing, your lender may require you to perform the repairs before your sale is completed. If you\’re stuck playing for those repairs, you may be able to negotiate with your bank to include the repair costs into your mortgage loan.
Are you searching for Rancho Santa Fe homes for sale, then check out these local Rancho Santa Fe Realtors to locate the best one.
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