The most major contingency in the Real Estate transaction is the inspection period. It is typically a 10-15 day period from which you can hire a home inspector to provide you a report of their opinion of condition. In the report, they will provide opinions of defects and they can recommend further investigation and/ or they state that a repair should be completed.
The inspector does not include in the report how to correct, they do not recommend companies to do the repair. Your agent may have qualified persons from previous dealings or AngiesList is always an option.
The Buyer takes the information in the report and tells the agent what items within the report need to be repaired or resolved before they move forward with the purchase.
The Buyers agent provides this list of desired repairs to the Sellers agent on a “Post Inspection Addendum” boilerplate form. After the presentation of this form the Sellers have a negotiated time period to respond to the addendum. We usually write 3-5 days in the purchase contract.
The Sellers can negotiate from the Addendum. While it is a request of repair, it is formally a counter offer to the original purchase contract. As a buyer, you should understand that they can say “NO” to any item. Typically, if the request is reasonable, we get this negotiated pretty easily unless a structural or major mechanical system needs addressed. Sellers are hesitant to invest money in the house that they want to Sell, and Buyers are wanting a stable house to move into. It is critical that both agents understand their clients goals; Buyers Agent- Buyer needs a house; Sellers Agent- navigate the Owner to a successful Closing.
After everyone is satisfied, the Buyer and Seller sign the addendum and move forward to Closing!
If the Buyer and Seller can not be satisfied, then the Buyer is Released from the Contract and retains the Earnest Money deposit because they exited the contract using a negotiated contingency.
In the Sellers market that Cincinnati saw the summers of 2014 and 2015, I saw many contracts being emotionally written and then the buyers agents’ used the inspection period to negotiate the transaction to the real market price. It was a tactic used to emotionally invest the Buyer and Seller, then you leverage the fear of the Sellers that the house would look defective if they couldn’t negotiate with the Buyers. It is something to be aware of during the transaction!