Should You Accept An Inspection Contingency?
Professional Home Inspections Protect Seller And Buyer
Inspection contingencies have become a standard part of purchase offers nationwide, at least until recently. In some very active real estate markets, however, a reverse trend is taking place. Home buyers are foregoing professional inspection contingencies to make their purchase offers more enticing to sellers. That sounds good to sellers. Why jeopardize their home sale with an inspection that can be avoided?Seller Beware
The answer may be in the fact that post-settlement lawsuits are on the rise, brought by buyers who've encountered problems in homes they purchased without a professional inspection. In the last 10 years, most states have nearly gutted their caveat emptor ("buyer beware") types of laws, giving home buyers more protection through property-disclosure and seller-disclosure laws.
Material defects should definitely be disclosed. However, many sellers don't know what qualifies as a material defect. For example, if the basement floods during heavy rains, but the seller paints the basement to hide all evidence of this defect, the buyers won't be aware of this material fact—a fact that should be disclosed. Many sellers aren't even aware of their home's defects. More and more, they're having to prove their ignorance in court, after the closing.Playing It Safe
What's a home seller to do? One approach is to pay for your own inspection prior to putting your home on the market. That way, you know exactly what problems the home has, and you can take care of them before sale time. Or, you can show your inspection report to home buyers, selling your home "as is."
A third approach: Accept a home-inspection contingency but avoid the "general contingency" variety. This clause stipulates that the contract is contingent on the buyer conducting a "satisfactory" professional home inspection. It allows a certain number of days for the buyer to conduct the inspection and report back to the seller, and allows the seller time to respond to the inspector's findings. With a general contingency clause, if the buyer does not like anything in the inspection results and chooses not to go forward with the transaction, the contract is null and void. Simple as that.
Instead, opt for a "specific contingency," which spells out particular criteria that must be met before the buyer can back out, such as the seller's failure to fix a problem identified by the inspection. The buyer can't just walk away for any reason.