Once a buyer finds a home to purchase, the first order of business is to make an offer to the seller, normally done by way of a written contract. Like most real estate companies in our area, House 2 Home Realty uses the Residential Sales Contract form provided by our local Egyptian Board of Realtors (EBOR).
One of the decisions the contract requires the buyer to make is whether or not to have a home inspection. Buyers may choose to waive inspections, but most choose to have, at minimum, a building inspection, and this option is always encouraged by H2H brokers.
The buyer may also opt to have other types of inspections -- pest, radon and mold, for example. Most loan types require pest inspections and some lenders may even require home inspections, so a buyer should ask their lender what inspections are required before making any offers. Keep in mind that inspections are generally a buyer expense. There is at least one exception to this rule: VA loans require sellers to pay for the pest inspections.
On the residential sales contract, the buyer will ask for a set number of days in which to have inspections performed. While buyers generally ask for 14 to 21 days for inspections, buyers and sellers must come to agreement on the number of days that will be allowed. In other words, inspection periods are negotiable.
If a buyer chooses not to have an inspection, the buyer is allowed to choose that option on the contract. While not recommended by H2H brokers, buyer choices and directions are always respected and followed. In some situations, the decision to forego a home inspection could be a valid negotiating tool for a buyer who is in competition with other buyers to purchase a home or a purchaser who is simply seeking the lowest possible purchase price. A seller may agree to a lower sales price if he or she doesn’t have to worry about additional negotiations and expenses resulting from inspections.
The contract says that only material defects, not minor repair and maintenance, should be requested for repair by the buyer following inspections. The form provided by our Egyptian Board is referred to as a “Buyers Notice of Condition of Premises” form or COP.
While the name is a bit indirect, the COP is nothing more than a “repair/replace request form” from a buyer to a seller. The contract and the COP are filled in with deadlines in which to complete inspection negotiations that buyer and seller must keep in mind as they negotiate any requested repairs.
A buyer may ask for repairs to be completed prior to closing or they might ask for a credit in lieu of repairs at closing, or maybe even a combination of both. There is no set rule on what is requested and what is agreed to, except that both parties must agree to the solution and sign off on any agreements. If a seller will not make wanted repairs or provide a credit that the buyer desires, the buyer has a choice to make: proceed with the purchase or notify the seller in writing that they will not purchase the property.
According to the contract, if a buyer chooses not to proceed with purchasing the property, he/she will be entitled to have earnest money refunded. However, it is important to remember that your real estate brokerage does not control the earnest money. Both parties have to sign off before returning any earnest money to a buyer, so the seller could potentially stall and take a few days to accept that the deal is dead.
Your House 2 Home broker will help guide you, per the contract, through any situations that occur during this process.
If legal advice is needed anywhere in this process and you don’t have an attorney, your House 2 Home Realty broker will provide you with names and numbers of reputable attorneys. It is rare that inspection negotiations go awry to this extent, but our goal is always to take care of our clients and provide appropriate help when needed.