Buyer Inspection Period
Purchasing real estate does not need to be complicated. And it should not be expensive. Let us introduce you to Homsby, a virtual real estate brokerage that’s boldly changing the status quo. We provide homebuyers, like you, the support and services you need and want, for a flat fee. At close, we collect the commission your traditional buyers’ agent would be paid, we subtract our flat fee, and then refund you what is left over. Sound too good to be true. It’s not.
The Inspection Contingency, also known as the Inspection Period or Due Diligence Period, is the period defined by the Buyer in the Purchase Agreement during which a Buyer can perform their investigations on the property they intend to buy. During this time, a Buyer should have the property inspected by licensed Tradespeople (e.g. home inspector, plumber, electrician,etc.) to get a detailed understanding of the property itself. Any inspections conducted are the financial responsibility of the Buyer, unless explicitly stated in the Purchase Agreement, and typically well worth the money spent to become aware of current property condition.
Prior to the expiration of the Inspection Period, a Buyer has a few options:
- Buyer can cancel the contract and request the return of their deposit.
- Buyer can request the Seller make repairs prior to close. Seller must agree.
- Buyer can request Seller to escrow funds to make repairs post close. Buyer, Seller and Buyer Lender must agree. (not common)
- Buyer can request Seller to provide a credit for repairs, which Buyer can apply towards closing costs, for example. Seller must agree.
- Buyer and Seller can negotiate a reduction in purchase price.
- Buyer can remove the Inspection Contingency with no request for Seller credit or repairs.
FYI — It should be noted that if you are obtaining a loan to fund the purchase of the property, some of the above decisions can affect your mortgage financing. During the Inspection Review with your Homsby Agent, we will discuss your options prior to pursuing a direction so that you position yourself to succeed with both your lender and the seller.
Due to the importance of time for discovery that the Inspection Period provides to the Homebuyer, it is prudent that most Buyers build in enough time to conduct their investigations. Within a 30–35 day escrow close, Homsby recommends that a Homebuyer define an Inspection Contingency between 14 and 21 days from the mutual execution of contract to allow time to conduct all investigations. Depending on Buyer circumstances and the property market, the defined time to investigate can be shorter or longer. In the most competitive of markets, some Buyers will forgo an Inspection Period within their offer altogether and accept the risks associated with purchasing the property “AS-IS” in their offer. Homsby does not recommend this action for even the most sophisticated of Buyers, but realizes that it is sometimes the only way to get control of a property in the most competitive of circumstance.
For most offers, Homsby recommends that a Buyer staggers the Inspection Contingency with that of their Appraisal and Loan Contingency within their offer, to provide for an added layer of protection should an unforeseen circumstance arise. As an example, Homsby recommends the following deadlines when staggering contingencies for 30, 45, and 60 day closings.
Please note that these are only examples and individual circumstances for time requested to conduct each contingency will vary. The intent is to allow yourself enough time to complete the actions necessary to decide to remove the contingency within the time-frame you define.
Speak to a Homsby Agent now to see how we are pairing expert virtual agents with Homebuyers like you to confidently purchase real estate and save your hard-earned money.