The Inspection Process

What to Expect During the Inspection Period ….

Your Most Frequently Asked Questions and our Answers!

You’re made an offer on your new home, everyone’s signed on the dotted line, escrow is opened, and now your agent tells you that the inspection period has begun. We’ve compiled a list of some of the most frequently asked questions buyers ask during the inspection period.

Q. What IS the inspection period?

A. The inspection period is a length of time, pre-negotiated in the contract, during which the buyers can evaluate or investigate the property before purchasing it. If the buyers don’t like what they see or find out about the property, they have the right to ask for repairs or cancel the contract all together.

Q. How long does it last?

A. A 17 day inspection period is default in the California Association of Realtors (CAR) standard Residential Contract. However, it is negotiable so check your contract for the time specified. Any length of time can be agreed upon between buyer and seller at the time the offer is made or during counter offers. If the inspection period is ten days, it would begin ten calendar days after the date the last person signed the contract.

Q. Do I really need an “official” home inspection?

A. While home inspections are not required, they’re considered an essential part of the due diligence process. Real estate agents are generally not qualified to inspect and evaluate your home for physical defects. However, certified home inspectors are. While they cost on average between $250 to $600, they may shed light on hidden problems before you buy the property.

The top ten areas that inspectors examine include: the exterior (which can be limited for a condo inspection), the interior, the structure, the plumbing system, the electrical system, and the heating and air conditioning systems. They’ll also let you know if there’s any deferred maintenance that needs to be addressed.

Q. When do I pay for the inspection?

A. In most cases, at the time of the inspection.

Q. Can I be at the inspection?

A. Yes, however it’s not required. When buyers are present at the home inspection, they’re able to ask follow-up questions after the inspector has completed his inspection. It’s much easier to understand the problem if the inspector shows you the defect and explains what needs to be done to correct it.

If you’re not present at the home inspection, you’ll receive a detailed home inspection report to review, and most inspectors include photos in the report.

Q. The home inspection is done. Now my agent tells me that we have to fill out a Request for Repair form, a Contingency Removal form or a Cancellation form. What are they?

A. In essence, the buyer agrees to one of the following options: Ask for repairs or credits based on defects found in the property as a result of inspections. If there’s no concerning defects found, it may be time to remove your inspection contingency, or if the buyer does not want to proceed with the purchase, a cancellation form is used.

Q. What’s on the Request for Repair form, what are the options?

A. The buyer has the option to request that repairs are made, as for a credit for repairs. The Seller may accept, reject or counter this request. The Seller needs to carefully consider the results of the inspections, as they may have to disclose any defects to future buyers and respond accordingly.

Q. If there are exterior repairs that need to be addressed, who handles them – the homeowner or the HOA?

A. When you buy a condo, you own the horizontal space between the walls. That means, in general, the homeowner is responsible for the maintenance and repair for everything from the walls inward, which includes damage to walls, paint, appliances, and plumbing.

However, there are exceptions, and it can get complicated. For example, if a water pipe is shared by the unit and other parts of the building, it may be the responsibility of the HOA. Water stains may be the domain of the HOA or the neighbors above.

If termites (found more commonly in townhome style residences rather than condos) are discovered on the outside, the HOA might be obligated to handle the extermination and any possible damage. If, on the other hand, they’re found between the walls, the homeowner may be responsible.

During the inspection period, we work with the homeowner associations to make sure the responsibility for repairs is understood and negotiated, when applicable.

Q. I plan to submit a list of repairs to the seller. What are my chances the seller will agree to fix all of them?

A. It depends. If it’s a seller’s market with low inventory, be prepared that all of your requests for repairs may not be met.

The seller can elect to fix all, some, or even none of the repairs. This is called the Seller’s Response. If the seller agrees to fix all, the inspection period ends. If the seller elects to fix none or some of the repairs, you have five days to decide whether or not you want to accept or cancel the contract.

During the inspection period, get an estimate of what repairs will cost. Some buyers choose to cancel the contract and find another property due to repair costs. Keep in mind, however, that a perfect property may cost more because it is perfect.

The Request for Repairs must be submitted before the end of the inspection period and can only be submitted one time. If no Request for Repairs is submitted and the contract isn’t cancelled, it’s assumed that you accept the house with the problems your inspector found. In some cases, the contract language alters this right, such as an “as-is” clause.

Q. Can you tell me more about the cancellation policy?

A. If at any time during the inspection period, you discover information about the house or the neighborhood that you don’t like, you have the right to cancel and receive a full refund of your earnest money, as long as other language hasn’t been inserted into the contract.

Q. The seller has agreed to some of the repairs. How long does he have to complete them?

A. If you’ve agreed to the seller’s list of repairs, the seller has until three days before close of escrow to complete all repairs.

Q. What do I need to know about the Contingency Removal Form:

In California, the contingency removal date itself is not what actually removes contingencies. Rather, it’s a buyer’s submission of the contingency removal form. If the contingency removal date is March 1, 2017 and no form has been submitted, that day can come and go and contingencies will still exist. Contingencies will only be removed when the buyer submits the removal form; and that can happen before, on or after the removal date. Once the removal form is submitted, the sale can move forward.

Essentially, in California, the removal date can be thought of as the deadline for buyer to submit the removal form. If the buyer fails to submit the form by the date outlined in the contract, then the seller can take steps related to a buyer breach. This can include serving a notice to perform or seeking to cancel escrow.

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