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.

How To Sell Your Current Home And Buy Another

"Can I find the new home I want and then sell my current home?" That is a question I get often, and my answer is always the same, "It depends."

Most of the time a client asks that question, what they really are asking is whether they can make an offer on a new home contingent on selling theirs. In most markets the answer is a definite, "No". Rarely will everything align to make it reasonable for a home Seller to accept an offer that has a home-to-sell contingency. That would just give total control of the sale of the Seller's home to the Buyer, with no guarantees and with no ability to accept another offer.

Here are the most common ways a Seller can sell their home and buy another. Almost all of them have some good features and some not so good.

1. Find the new home and write an offer to buy it with cash. Then sell your current home. This is a non-contingent offer that requires you to have sufficient cash on hand to buy the new home. For those able to do it, this has many great advantages: you have a better chance of your offer being accepted; you can take your time moving out of your current home; and you don't have the problem of losing the house you really like because you don't have your home on the market yet.
2. Find the new home and write an offer to buy it with a loan. Then sell your current home. This is a non-contingent offer that requires you to have sufficient down payment cash on hand and the income to get the loan. If you have a loan balance on your current home, you must have enough income to qualify for the new loan and continue making your current home's payment. This is almost as good as option #1 except that it often produces some anxiety about making two house payments.
   
   If you are over 62, you might have an option of using a Reverse Mortgage to buy the new home. This option has some special requirements, so we definitely need to talk about them.
   
3. Put your home on the market to sell, and then write an offer on the new home when yours is Under Contract. In my experience, this is the option most move-up or move-down clients have to choose. They don't have the cash or the income to buy a home without having theirs sold first. It does allow you to write an acceptable offer though, even if your home is not closed yet. Most Sellers will accept an offer contingent on the closing of a property that is Under Contract and due to close at a reasonable date. Sometimes they require that your contract is beyond the inspection contingency date, however.
   What I generally do in this situation is start looking at homes to buy as soon as we put your home on the market. This allows you to find the neighborhood where you want to live, and to identify one or more homes that you would like to buy. Then, once an offer on your home is accepted, we go back to those homes you have pre-selected and that are still available (along with other new listings in those areas).
4. Buying a new builder's home is a different situation. Unless the builder has an inventory home that you like, you have to plan to get your home sold before the new one will be available. This generally involves selling your home, living in a temporary home or apartment, and then moving into the new home when it is completed.
   This is very common for new builder home buyers because the builders will require a non-contingent status in their contracts. At some point in the construction schedule, they will require you to either have your home sold and closed or to sign a waiver of contingency. That means you agree to proceed with the purchase of the new home and you can demonstrate that you have the resources to buy it even if your home doesn't sell first.

Every situation is unique, so if you are thinking of moving that will likely involve selling your home and buying another one, call me. I can help you work through all the options open to you. For all my contact information, see www.antleproperties.net.