Ask Val: Home Inspection Contingency

This regularly-scheduled sponsored Q&A column is written by Val Sotillo, Northern Virginia-based Realtor and Falls Church resident. Please submit your questions to her via email for response in future columns. Enjoy!

Question: I’m hoping to purchase a home this year and I’d like to know, how does a Home Inspection Contingency work and what’s reasonable to expect from the seller?

Answer: Most sales contracts include an Inspection Period for buyers to conduct various inspections of their choice on the property. Depending on how the contract is structured, buyers may have the right to negotiate for repairs or credits based on the findings and/or the right to terminate the contract.

What Is A Home Inspection?

Shortly after ratifying (signed by both parties) a contract to purchase a home, most buyers will (read: should) hire a third party inspector to inspect the entire home and produce a report of any issues, from foundation cracks to missing door stops.

Unless you’re buying a new home, you should expect the inspection to turn up at least a handful of items that you or the seller should address.

In most cases, the contract to purchase is contingent on the home inspection, meaning the buyer has the right to ask the seller to fix or replace anything and/or provide a cash credit to the buyer at closing. If the buyer and seller are unable to come to an agreement on these requests, the buyer has the right to void the deal.

What Should You Look For?

The goal of an inspection is to ensure that the seller is delivering the property in the condition both sides expected while negotiating the sale price. Generally, you can divide findings into big-ticket items that impact the value of the home and must be addressed and smaller punch-list items that shouldn’t cause much friction. The big-ticket items I look for during an inspection are:

• Structural flaws
• Water penetration
• Safety hazards
• Inoperability (e.g. air conditioning not working)

System Life Expectancy

You should also determine the age of major systems like the roof, windows, HVAC and water heater prior to making your offer, and verify these are accurate during the inspection. Make sure you’re clear on the expected life expectancy of these systems while you’re negotiating the sales price and factor this information into your offer.

You’ll have a tough time convincing most sellers they’re on the hook for crediting you the cost of a 17-year-old water heater if that information was made available prior to your offer, assuming the system is working.

What Should You Ask For?

You’ll generally be deciding between asking the seller to repair or replace something or asking for them to provide a credit at closing. Often times an inspection agreement includes both — a credit for some items and a request to fix/replace others. Sellers must use licensed contractors and provide works receipts for any work they do.

In general, if something you’re asking for involves personal preference or you want to have control over the quality of the result, it’s best to ask for a credit and handle it yourself.

For example, if the deck is falling apart and needs to be replaced, you don’t want the seller managing the design and construction of a new deck so ask for a credit for the replacement cost and make sure you’re getting the deck you want.

Additionally, if the A/C system needs to be replaced and the seller has a mid-grade system, but you’d like to install a top-of-the-line A/C system, it’s best to request a credit equal to the replacement cost for a comparable mid-grade system and invest in the extra cost of a nicer system yourself.

Inspections Don’t Need To Be Contentious

Inspections are one of the most common points of contention between buyers and sellers, but with the right preparation and expectations going in, it can be a smooth process that both sides are happy with.

Like the negotiations you had on the sale contract, the inspection period is also a negotiation.

If you’d like more information, or would like a question answered in my weekly column, please reach out to [email protected]. I hope to hear from you soon.

Val Sotillo is a licensed Realtor in Virginia, Washington D.C., and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 703-390-9460.