Getting over the Inspection Hurdle to Closing

Getting over the Inspection Hurdle to Closing

You’ve just accepted an offer on your home, and now you are under contract. If the Buyer of your home is paying all cash and had waived the inspection and appraisal, you have smooth sailing to a quick close.

But what if the Buyer did not waive the inspection (which would generally be a foolish thing for a Buyer to do), what comes next.

Within the first week or so, the Buyers will schedule a time with their inspector when they can get together to inspect your home. That often creates some anxiety for the Seller, even if it’s a fairly new home and no major problems are expected. Everyone has heard some horror story of a deal crashing because the inspector’s report scared off the Buyer.

There is no need to get too anxious, however, if you know what to expect. Here is the normal inspection process:

1. Buyer, Buyer’s Agent, and inspector find a mutually agreeable time.
2. Buyer’s Agent calls Seller’s Agent to make sure the time is agreeable with the Seller. Since the Seller and any pets should be gone for the inspection, it can get complicated to schedule a time that works for everyone.
3. Buyer, Buyer’s Agent, and inspector are present for the inspection, which usually takes 2 to 2 ½ hours or more, depending on the size of the property and whether it’s a condo, townhouse, or single-family home. It can take a lot longer if it’s a farm or other property with multiple buildings.
4. After the inspection, the inspector gives the Buyer (and usually the Buyer’s Agent) a copy of the report.
5. Buyer and Buyer’s Agent discuss the report and decide what issues, if any, the Buyer wants to ask the Seller to correct.
6. Buyer’s Agent prepares an Inspection Objection form and sends it to Seller’s Agent after the Buyer signs it. This must get to the Seller on or before the Inspection Objection Deadline (Section 3, Item 25 in the Colorado purchase contract).
   This Inspection Objection generally includes only major problems that are either safety issues or would cost a lot of money to fix. Sometimes, though, the Buyer asks for a “laundry list” of repairs: everything the inspector identifies, regardless of how trivial it may seem.
7. Seller’s Agent reviews the Inspection Objection form with the Seller and they prepare an Inspection Resolution form together. The Seller has three options:
   1. Agree to correct every issue on the Inspection Objection, or
   2. Agree to fix some but, not all, of the issues, or
   3. Decline to fix any of the issues.
      
      
8. Since all that is needed is an agreement between Buyer and Seller that there is a resolution of the objection issues, “a.” above will provide that resolution, while “b.” or “c.” above will require a choice by the Buyer to get to a resolution.

Buyer has three options in the case of “b.” or “c.”:

(1)    Negotiate for a different resolution, or

(2)    Agree to buy the house regardless of the Seller’s willingness to fix all the issues.

(3)    Terminate the contract, get their Earnest Money deposit back, and look for another house to buy.

If there is no resolution by the Objection Resolution Deadline (Section 3, Item 26 of the contract), the contract terminates automatically.

The first two options provide a resolution, and the contract then continues to the closing.

Seller now has until closing, or whatever time specified in the Inspection Resolution, to complete the repairs they agreed to do.

Typically, the Buyer’s lender waits until there is an inspection resolution before ordering the appraisal, so the Buyer is not stuck with paying for an appraisal ($500 or more) for a house they don’t want to buy.

Still have questions? Feel free to contact me, and I’ll be happy to talk with you. Rudy Antle, Call or Text: 303-548-6353, rudyantle@msn.com.