Home Defects – Every Home Has Them
We’d all like to buy the perfect home. Unfortunately, it just doesn’t exist. Even new homes have defects. That’s why it’s important to have any home you buy inspected by qualified professionals-even if it’s brand new.
You’ll undoubtedly discover defects during your inspections. In fact, you should hope that any significant defects are uncovered before you remove your inspection contingency from the purchase agreement. It’s far worse to be surprised after closing by unanticipated repair expenses.
Armed with a complete assessment of the current condition of the property, you can make an informed decision about whether to purchase the property in its present condition. Or, you may want to renegotiate the terms of your purchase agreement with the seller. If defects are incurable, you may want to withdraw from the agreement altogether.
Your purchase agreement should set guidelines for how inspection defects are to be handled. For example, the seller may have had a “termite” inspection completed before marketing the property. If so, the contract might specify which party-buyer or seller-will pay for the required corrective work.
Not all inspection contingencies are the same. Some specify the buyers have the unilateral right to approve or disapprove inspections. In this case, if the buyers disapprove the inspections, the agreement may be cancelable at the buyer’s option.
Even if your agreement allows you to withdraw due to inspections, carefully consider before electing this option. You will already have spent considerable time, effort and money finding and inspecting the property. If the defects are correctable, it’s usually worthwhile to try negotiating an agreement with the sellers rather than starting the process all over again.
Some inspection contingencies provide for buyers to give the sellers the opportunity to correct defects, rather than just walk away from the deal. In this case, the terms of the agreement often become subject to further negotiation.
In this real estate market, sellers are wise to consider any reasonable proposal from a well-qualified buyer. If the inspection-related defects are significant, they are likely to be a concern to other buyers too. Depending on the law in your state regarding seller disclosures, you may have to provide copies of the buyer’s reports to future buyers who are interested in the property.
There are several ways in which sellers can participate in buyers’ repair requests. They can have the work done by closing, if time permits. Often contractors will accept payment at closing.
Or they can credit money to buyers as long as the credit is called a credit for buyers’ non-recurring closing costs. Lenders usually limit the amount of such a credit to 3 percent of the purchase price or equal to the actual amount of the non-recurring closing costs, whichever is less.
If you have questions about home inspections and how they can affect buying or selling a property, use the comment link below to contact us. We’ll get back to you right here with answers.