Expert Advice

How Do You "Lift," or Remove, a Home Inspection Contingency?

A home inspection contingency is removed by sending the seller a list of home inspection items that the buyers wish to have repaired. Remember - the home inspection items are different than the walkthrough items; a difference that is explained in detail here. We had to respond within seven days of the contract ratification to avoid missing our response window.

You'll also notice in the email below and the attached form that the buyers opted to request a credit for some of the work. This is very standard and is up to you - in some cases buyers would rather have the seller take care of everything, and in other cases the buyers would rather get the money for the credit and do the work themselves.

Also keep in mind that the home inspection items are a negotiation, meaning that although this is what the buyers were requesting, there's no guarantee the seller would actually agree to the repairs or the amount of the credit.

Below you can find the email we sent the listing agent for a recent transaction where we were naming our conditions for lifting the home inspection contingency. Also, you can see the actual home inspection document here: DROdio - Sample Building Inspection Report

*** NOTE: SEE UPDATE BELOW ***

And you can see the inspection contingency addenda we sent here: DROdio - Sample walkthrough and home inspection item list

John Doe,

Please find the walkthrough & home inspection list attached, as well as a copy of the actual home inspection report.

The buyers are willing to accept a credit for most of the work that needs to be done. There are just a few items on the walkthrough list that they want to make sure are performed before settlement.

If your seller has any questions, please feel free to notify me. Also, please make sure your seller knows that item #2 on the walkthrough list is a very serious condition that poses a health hazard to the occupants of the house and should be fixed immediately. The inspector told me that he notified the seller of the severity of the item when he was at the house, but I just want to reiterate it for you.

Please confirm receipt of these documents. I can also send via fax if necessary.

Regards,

DROdio

*** UPDATE: ***

We were able to negotiate a final release of the home inspection contingency. Here's how everything played out:

The seller countered with this document: DROdio - Seller Counter Offer to Home Inspection . What it said was that the seller would fix some but not all of the walkthrough items (not including the noisy washing machine), and would give a $3,000 credit for the remaining walkthrough and home inspection items. But the important thing the seller added was that the buyer would accept the property in "as is" condition once this amendment was ratified.

As I explained to the listing agent, I as a Realtor would not be doing my job if I allowed my buyers to sign his addendum. Why would the buyers give up their rights to having all the Walkthrough items in working order? Let's say hypothetically that the buyers signed the seller's counter offer, and then upon final walkthrough we found that the entire electrical system was faulty. They buyers would be up the creek without a paddle because they would've waived all their rights to Paragraph 7 of the sales contract (you can see an excerpt of that here) which states that anything electrical, plumbing or appliance related has to be in normal working order.

Here is the final document we sent back to the seller, and which we were able to get signed by all parties: DROdio - Final home inspection contingency release . I have to say this was some pretty good negotiating on our part. In the end, we hit all our major points, namely:

  1. We got the seller to agree to fix the big walkthrough items, including the furnace, the hot tub, and the washing machine.
  2. We got the seller to agree to a $3,000 credit for the remaining items & home inspection items
  3. Most importantly, we got the seller to agree to waive his insistence on an "as is" clause in the document, so if any additional items were to surface, we would have full rights to demand their repair.

We often tell our clients that they could buy or sell a house without a good Realtor, but if they make one mistake, it could cost them $10k or more. This scenario is a perfect example of that. If we hadn't ensured working condition of the hot tub, that could have been a $3k item all by itself. It was a difficult negotiation with the listing agent (who was also a very good agent) but in the end we reached a compromise that worked for both the buyer's needs and the seller's needs.

*** SECOND UPDATE ***

Great news - the sellers had a professional go by the property and check the washing machine. His expert opinion was that it would in fact need to be replaced. The seller agreed to provide a $400 credit to the buyers.







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