If you include an inspection contingency in your offer to buy, you may be able to walk away from the sale if there are “defects” listed in the inspection report. “It’s important to understand what a defect actually is before writing an offer,” Jim said. Check out the definition of “defect” in a typical Offer to Purchase: Defect means a condition that would have a significant adverse effect on the value of the Property; that would significantly impact the health or safety of future occupants, or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the premises.
Jim also noted that most offers include a “right to cure,” which means the sellers have the option to fix any of the issues. “In a competitive market, most sellers will not accept an offer without this option,” he said.
Stephanie and Andrew Budnik recently put an offer on a Muskego, Wis. home built in 2005, but the inspection was uncomfortable. “I was overwhelmed. The house was so flawed, and he pointed out so many things, I was stressed out,” Stephanie said. They ultimately used the inspection report to back out of the sale.
It was an uncomfortable situation, but looking back, the inspector was right. “Those sellers refused to fix anything or drop the price. The house was poorly constructed and needed a new roof, siding and windows, a total of $30,000 in repairs, which was over our budget. We found out later that the house finally sold at a lower price, just not to us!” Stephanie said.
On the other hand, an emotional reaction to a lengthy inspection report could cost you a perfectly good house. Jim said he worked with first-time homebuyers who overreacted when they saw all the miscellaneous things that were wrong with the house. There were no major defects, but they opted out. “And they regretted that decision! Because they eventually had to settle for a smaller, not-as-nice house at a higher price,” Jim said.