During the Due Diligence Period (usually the first 10 days after contract is signed by both parties and delivered to both parties), Buyer may do any and all inspections she wants. A general home inspection by a licensed professional is a great start. This gives the Buyer a once-over of all the home's working systems: plumbing, electrical, A/C, roof, and so forth.
If the general inspection turns up anything odd, or if the Buyer has concerns about specific items, she can do additional inspections. Sometimes calling in a roofer, A/C contractor, electrician or plumber is a good idea. Please note that general home inspections usually do not include home entertainmnet sound systems, security systems, and the home automation systems that are all the rage in luxury homes these days, whereby you can monitor your home security system over the Internet while you vacation in Cannes.
During the inspection (or Due Diligence) process, the Buyer retains the absolute right to back out of the purchase for any reason and be refunded their Earnest Money.
Buyers, after your inspections are complete, you’ll have 3 options:
- Accept the home As Is
- Back out and take your Earnest Money with you
- Give the Seller a list of repairs you require and give him a chance to fix them all
Sellers, you will now have 3 options:
- Fix everything – Buyer is now legally bound to complete the purchase
- Fix nothing – Buyer now decides whether to accept the property As Is or walk away with Earnest Money in hand
- Fix some things – Buyer now has the choice to accept the property with the repairs Seller’s willing to make, or walk away with Earnest Money in hand
Please note that there is no step in here for re-negotiating the purchase price! The purchase price and the repairs are separate issues, negotiated separately, and are totally unrelated. Sometimes, some Sellers may choose to offer a credit to the Buyer in lieu of making some or all of the requested repairs. The Seller is not bound to offer a credit and Buyer may not ask for a credit in lieu of repairs, regardless of the inspection findings. If a credit is offered, the amount is negotiable.
Please also note that there are time-sensitive deadlines involved in this process. First, Buyers' requests for repairs must be submitted by 11:59 PM local time on the last day of the Due Diligence Period. You do this on a form called a BINSR (Buyer's Inspection Notice and Seller's Response). Buyer - missed your deadline? You just bought the house As Is.
Second, the Seller has 5 days to respond to the BINSR using the rest of the same form. Upon receipt of the Seller's response, the Buyer will have 3 days in which to submit her reply about whether she'll take the house with the repairs the Seller's willing to make, if any.
What if the Seller doesn't reply to the Buyer's BINSR? The Buyer must assume the Seller intends to sell the home As Is. The Buyer has 3 days from the date the Seller's response to her BINSR was originally due in which to decide whether to complete the purchase (which we now know will not have any repairs done on it) and submit that decision in writing to the Seller using the rest of the rest of the BINSR form.
Confused yet? This is a great example of why it's SO critical to hire a professional, full-time Realtor. This isn't rocket science, but it is the sort of situation where mistakes can be so monumentally costly that it's best to hire someone who's job it is to do this all day, every day, and carries insurance to protect you and themselves against mistakes. To err is human nature, to buy real estate without a professional Realtor is just silly.
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