Real estate contracts are some of the most complex documents that people sign during their lives. It is common for those hoping to buy a home to include a few provisions or contingencies in their offer so that they don’t lose their earnest money or other investment in the property they want to purchase.
An inspection contingency is one of the most popular. It requires that the property pass inspection without any major defects except those already disclosed by the seller. Sometimes, the inspection comes back with news of termites, foundation issues or dry rot to the boards underneath the roofing shingles. How do you move forward with the sale when the inspection uncovers issues?
Refer to the initial offer
Looking at the language of the contingency will give you an idea of how to resolve the issue. Sometimes, the buyer is very clear that they only offered the amount that they did because of the expected condition of the property. If it is in worse condition than that, they will expect the seller to accept a lower price or to fund the repairs themselves. If the contingency is not specific on who will cover these costs, you may have to prepare for negotiations.
Each party may need to make a concession
Unexpected defects in a property are upsetting to a seller, who now has less return on the sale, and for the buyer, who will either have to walk away from a purchase or take on a property with major work required.
Sometimes, the seller needs to move and does not have time to relist their home. They may agree to assume the cost for the repairs as long as the buyer makes good on the original offer. Other times, if the seller has more flexibility, they may back out of the sale, revise their disclosure and relist the property. Sometimes, both parties agree to meet halfway by splitting the cost of necessary repairs.
Your goals and financial circumstances will influence the approach you take to resolving inspection issues during a home purchase whether you are a buyer or a seller.