What you need to know about inspection contingency when buying a house in Arizona?
One of the important task or process of buying a house in Arizona is home inspection. Because inspection is so important, Arizona Department of Real Estate has include inspection contingency clause into standard Arizona Residential Purchase Contract section 6. Inspection contingency protects buyers from unknowingly purchasing a home with serious issues or environmental hazards that could require costly repairs.
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What is inspection contingency?
A home inspection contingency is a clause inside purchase contract that allow buyer to cancel the sale or try to negotiate repairs based on the results of the inspection. This contingency provides that if a home inspection reveals a major defects, buyer can cancel the purchase with earnest money, within a specific timeframe.
How does home inspection contingency work?
During the due diligence period, buyer will hire third party professional licensed home inspector to visually inspect the home. A standard inspection will go over the home’s structure, appliances and major systems to make sure that everything is working. This includes going over the foundation, roof and attic, major appliances, electrical, plumbing and HVAC systems. The home inspector then will make recommendations of their findings in inspection report. Buyer may also get separate specialized inspections such as pest, roof, water/sewer inspections during the same period.
Buyer disapproves
After the home inspection is completed, buyer will receive a copy of inspection report. If buyer has identified specific disapproved items, buyer and their agent can ask the seller for repair or renegotiate the sale price. Buyer agent will fill Buyer’s Inspection Notice and Seller’s Response – BINSR form and present to the seller.
If the seller is unwilling or unable to correct any of the item(s) disapproved by buyer, then buyer has the option to cancel the purchase and get back the earnest money. This is what the whole inspection contingency all about, allow buyer to cancel the purchase base on reasonable disapproved items on the home.
How long is an inspection contingency?
Per Arizona Residential Resale Contract section 6a in Due Diligence, buyer has 10 days to do inspection after contract acceptance, unless stated otherwise.
Should buyer waive inspection contingency?
The main reason inspection contingency is to protect buyer. By having home inspection, buyer will have a general idea of the property conditions. With the inspection contingency, buyer can cancel the purchase if the results of the inspection aren’t satisfactory. By waiving inspection contingency, it means buyer will buy the property AS-IS. This can be a huge gamble for buyers. For example, if a buyer waives an the contingency then discovers that the HVAC has issue, it’s the buyer’s problem. Buyer may need to hire HVAC company to repair to HVAC or maybe have to replace the whole HVAC. That can cost a lot of money and put buyers in a tough spot so soon after buying the house.
Conclusion
A home inspection contingency protects the buyer in the event that the home inspection reveals information that makes them not want to move forward with the sale. This clause gives buyer an option to cancel the purchase without breaching the contract and receive back earnest money.
Swee Ng, Realtor and Phoenix East Valley resident specializing in win-win real estate transaction through great communication and fighting for his clients’ best interest. After all, this is more than real estates, this is about your life and your dreams.
If you are looking to buy or sell your home in Phoenix AZ and surrounding area, we hope you will consider us. Contact us today for complimentary consultation.
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