Who ever said contracts have to be scary? Most of the time, it’s fear of the unknown that really scares us. As one of the top real estate offices in Venice, we’re digging into contract details to eliminate your fears and empower you with wisdom as you prepare to buy or sell a home.
In our first article of Real Estate Contracts: What Do YOU Need to Know, we briefly explained four basic terms of all transactions. We’ll continue in our series today in effort to shed some light on one of those key contract elements: the Inspection Time Period.
Whether you’re under a Standard or As-Is Contract determines what the inspection time period will look like. (For more on that, read our last blog post.) Since the As-Is Contract is the most common, we’ll keep our focus there.
The Inspection Time Period is the amount of time the buyer can perform inspections on every aspect of the home to ensure it matches their expectations. It’s also the time where the seller might be asked to pay for something extra or deviate from the original agreed upon price.
Because it’s an As-Is Contract, a seller or buyer can back out of the contract for any reason at any time within that period.
If that’s going to happen, both parties want to know about it A.S.A.P. That being said, when it comes to scheduling and completing inspections, sooner is always better…
Let’s say the initial inspection reveals a potential issue with mold, the roof, or the septic. These concerns tend to require additional inspections or quotes for repair. Leaving enough time to contact appropriate contractors and complete all due diligence is crucial. If the inspection isn’t done until the last day of the time period, then extra hassle, paperwork and delay are on the horizon.
Or, maybe an issue arises where there is no resolve between buyer and seller. Both parties want to be made aware of this as quickly as possible. In this market, more than ever, Time. Is. Money.
Prices are seemingly increasing by the day. If the seller is unwilling to accommodate the buyer’s wishes, that buyer needs to restart their home search. Now.
If the buyer decides he doesn’t want to tackle whatever the inspection revealed, then the seller wants the home back on the market… like, yesterday!
A little pro tip… when representing a buyer and submitting an amendment to the contract for an inspection resolution, I prefer to also submit a signed “Cancellation of Contract.” While, yes, we should always ensure we give the other party ample time to sign their portion, if it’s not signed by the deadline, a buyer can be in a bad spot with a loss of earnest money.
Also, a quick note when it comes to inspections where some professional insight can prove useful is this: Investors are purchasing every 1 in 7 homes nationally. Lately, I’ve seen investment companies offer WAY over asking price to outbid homesteaders. BUT, towards the end of inspection period, the investment company decides to ask for an array of repairs, credits, and the like, which can ultimately make the final purchase price far less than the sellers are wiling to accept. The buyer has had their home off the market long enough at that point, he may just move forward, even though he would’ve been better off with a desperate first-time home-buyer who’s been in an endless fight for a home, more likely to overlook a few minor inspection details for the sake of finally settling down. Just a thought.
Remember, “As-Is” does not mean the buyer must take the house exactly as it is or move on. There is usually some negotiation necessary. Just because standard inspection time is 15 days, though, doesn’t mean you HAVE to take that entire time to complete necessary inspections and make a decision.
If you’re unsure which repairs are worth negotiating over or what to do when an inspection reveals the unexpected, ensure from the beginning you’re working with one of the best real estate agents around so you can be walked through the process confidently and professionally. If you don’t know one, give us a call (941.412.1355.)
We’ll hook you up.