Home Defects - A Buyer or Seller Cost?

Inspection contingencies give homebuyers a chance to negotiate additional costs of minor home defects

Determining who pays for defects that are found during inspections before the closing can be a controversial and touchy subject, especially if you are talking to the home seller. Although it's not always true, most sellers feel that once a price is negotiated for buying the home, that price accounts for and includes any defects that may be found on his property in the last inspection stages.

Fact is, home inspection defects found after a home sale price is determined, is a negotiated matter in the contract that the seller's and buyer's real estate agents can work out.

Home inspections are performed to protect the buyer, and are typically allowed 10 to 14 days from acceptance of the home sale contract. An inspection contingency allows the buyer to ask for legitimate defects to be corrected. It is a negotiated part of most contracts, and can reflect a big challenge during the home closing. However, less than five percent of all transactions unravel during inspection, so rest assured it is something that works out most of the time.

Homebuyers should discuss contingencies with their agent. Your agent will know what to recommend for contingencies. Agents negotiate inspections nearly every time they work on selling or buying a home. They are skilled at ensuring that the terms of the contract are at the standard of which the seller is obligated. However, if a contract states an "as is" purchase, the seller is not obligated to pay for defects and there is no negotiation if any defects are found during the home inspection. If a contract states a "seller warranty" clause, the seller may be obligated to fix certain defects.

Typically, the buyer, the buyer's agent and the buyer's inspector, and frequently the seller, are present during the inspection. Most inspections can take between two to four hours to perform. The buyer usually covers the cost of the general home inspection. Other common inspections a buyer may wish to request are for termite, roof, pool, and radon.

What kind of defects does the contingency normally include? Defects discovered during these inspections are often issues that neither the buyers nor sellers were aware of before they entered into an agreement. For the seller, the inspection must address true defects in the property and cannot address issues such as normal wear and tear and/or items of a cosmetic nature. Some commons findings on home inspections include clogged gutters, stuck windows, missing retaining walls or deck security.

How can you prepare for a faster home buying or selling process? For sellers, choose to have an inspection before listing to get informed about the defect items that may need to be corrected. For buyers, discuss this subject with your agent before you go into contract.