Inspection Contingency

What is the Inspection Contingency?

The inspection contingency is a clause in the purchase contract that allows the buyer time (generally 7-10 days) to have a home inspection conducted by a licensed inspector.

Depending on the inspection findings, the buyer can ask for repairs or a discounted sale price from the seller. Or, they can exit the deal and keep their earnest money.

Why does the Inspection Contingency matter?

The inspection contingency protects the buyer from purchasing a home with any unknown or undisclosed issues. 

The inspector examines the property’s structural, systemic, and interior aspects: the foundation, appliances, and everything in between. Then, the inspector compiles a report that rates the condition of the home, with photos and recommendations for urgent repairs or features in need of routine maintenance.

The inspection report allows the buyer to research repair estimates that can be used to negotiate seller discounts, repairs or repair credits.

What happens if the home inspection finds problems?

If the inspection does uncover any issues, they will be either fixable (easy repairs) or significant (costly and lengthy repairs—e.g., extensive mold damage). 

However, in both cases, the buyer can cancel the deal and keep their earnest money or ask for repairs, repair credits, or a discount on the sale price. The seller then must respond to the buyer’s request within the period defined in the inspection contingency.

If the seller disagrees with their requests, the buyer has a certain number of days to decide if they’d like to waive the contingency and continue with the purchase—or cancel it. If the seller agrees, the sale continues.

And, if the seller agrees to and completes repairs—the buyer should ensure the repairs have been done during their final walkthrough and consider a follow-up (second) inspection before closing.