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What's a Home Inspection Contingency?

You've searched and searched and have finally found the one! Now, it's time to make an offer. A purchase offer can potentially include many different contingencies, but a contingency that is especially important (and highly recommended) is the inspection contingency. An inspection contingency gives a Buyer the opportunity to back out of the sale with no penalties, pending the home inspection. While not every sale will include this contingency, most will (or should!) and many lenders have conditions around inspections and approving a mortgage loan.

Deciding about a Home Inspection Contingency

As the buyer, you have the opportunity to outline the length of time that the inspection contingency is valid. It's typical for this timeframe to last about 10 days, although it can vary by location and sometimes a much faster window of time is needed in a competitive market. In other words, you, with the help of your Real Estate Agent, will need to contact an inspector, schedule the home inspection, receive the report, review the report and make any necessary requests (or express intent to walk away from the deal) to the seller within the specified timeframe. After this timeframe ends, while you may still be able to get out of your contract to buy the home if something goes awry, chances are slim that you will get your earnest money deposit returned.

Per the home inspection contingency, the contract will only move forward when the inspection is complete and both parties agree on necessary repairs. If the findings of the inspection report reveal extensive issues or damage (such as foundation concerns) or if the buyer and seller cannot agree on repairs, then per the inspection contingency the buyer can walk away from the deal — no questions asked (as long as it is within the inspection contingency timeframe) AND have their earnest money deposit returned.

Based upon the outcome of the inspection there are a few scenarios that can play out.

  • The inspection report doesn't uncover anything major and the Buyer wants to move forward. Sale is a go!
  • Based upon the findings of the report, the Buyer requests additional time for more thorough or specialized inspections. Sale is a maybe.
  • After reviewing the report the Buyer makes requests to the Seller. The Seller approves the requests and takes necessary action. Sale is a go!
  • After reviewing the report, the Buyer makes requests to the Seller. Seller counters and the Buyer must decide to accept or counter again. This continues until both parties agree. Sale is a go!
  • After reviewing the report the Buyer makes requests to the Seller. Seller refuses requests. Per the inspection contingency, the Buyer can walk away with no penalties or decide to continue with the sale without their requests being met. Sale is a maybe.
  • After reviewing the report, the Buyer decides not to move forward with the sale and per the inspection contingency there are no penalties. Sale is a no.
  • After reviewing the report, the Buyer makes requests to the Seller. Seller counters with a monetary credit "in lieu of repairs" usually put towards Buyer's closing costs. The Buyer must decide to accept or counter again based on if any of the repairs are required in order for the mortgage to be approved. This continues until both parties agree and are comfortable with the arrangement. Sale is a maybe!
Home Inspection Contingencies

It can be easy to get caught up in the purchase of your dream home and to want to do everything possible to make your offer stand out, but trust us, take a moment to address the inspection contingency with your Real Estate Agent while composing your offer. It has the potential to save you a whole lot of stress and even more money. Plus, assuming all goes well, (fingers crossed it does!) it's one step that brings you even closer to the purchase of your dream home. 😄

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Ready To Become A Smarter Homebuyer?

By signing up, you agree to Nestiny terms of use .
Whether you need a step-by-step guide, video resource or one of our many helpful tools, Nestiny has your back 24/7 for all things home buying and selling. You choose the pace, material, and when and where to learn. Unlock your free access to Nestiny today!
Are you a real estate professional? Go here .
By clicking this button, you'll enjoy free unlimited access to Nestiny and agree to our terms of use . And don't worry! Nestiny will not share your information with any parties without your consent.