You’ve found the perfect piece of property, and you’ve put in an offer. You signed the contract, but now you’ve entered into an inspection period. What exactly is an inspection period, and how long does it normally last?
What is an Inspection Period?
In real estate, an inspection period is the timeframe during which buyers have the opportunity to perform their due-diligence on the piece of property they intend to buy. It gives buyers an opportunity to inspect the property, and if it doesn’t meet their standards, they can either cancel the contract, or renegotiate the terms. If the contract is canceled, the buyer doesn’t lose money in the process.
Buyers can easily back out of a contract if they don’t like what they see during the inspection period. This could be anything from the neighborhood to issues with the home or even a dislike of the local school system. Buyers receive a full refund of their earnest money if they choose to walk away.
How Long Do Inspections Normally Last?
The length of the inspection period can vary from state to state, but in most locations, this period lasts 10 days, unless another specific length is specified. Buyers can ask for a shorter or longer inspection period if they wish. Ten days is not a whole lot of time, and during this period, you’ll want to arrange to have all of the necessary inspections performed.
Experts recommend having inspections performed well before the deadline, so you’re not scrambling to get everything done at the last minute. Getting everything done early will give you time to reflect on the property and whether it’s the right choice for you. It’s highly recommended that you contact the inspection company within 24 hours of reaching a deal with the seller. This will give you ample time to schedule the initial inspection and still give you time if a second inspection is required.
Is an Inspection Necessary?
Responsible buyers never skip out on inspections, especially if they’re buying a home. Many people consider forgoing the inspection to save on costs, but the average inspection will cost between $250 and $400. That’s a small price to pay for peace of mind in knowing that the home or property is up to your standards.
If you skip the inspection and go ahead with the purchase, you may find out later on that the home or land has a series issue that will costs thousands to fix. If you had known about these issues during the inspection period, you would have had the opportunity to back out of the deal.
A qualified, experienced home inspector will alert you to everything that is wrong with the property, so you can take the appropriate measures. Ideally, you want to hire an independent inspector that will provide you with a detailed report (complete with photos) of everything wrong with the home. If possible, meet with the inspector after he finishes the inspection, so he can go over everything with you. It’s easier to understand what you’re up against if the inspector can explain the problem firsthand.
What Happens if You Don’t Like the Inspection Results?
The inspector completed his inspection, and you don’t like the results. This happens more often than you think. What do you do now?
If you don’t like the results and no longer want to move forward with the purchase of the home, you can simply cancel the contract. If you cancel before the inspection period deadline, you will receive your earnest money in full. You won’t, however, receive a refund on the inspection(s) you had performed.
If you still want to go forward with the purchase of the home but want the buyer to make some repairs, you can have your real estate agent prepare a Buyer’s Inspection Notice. The notice should include all of the repairs that you would like the seller to make. The repair request must be made within the 10-day inspection period, and you can only submit a Buyer’s Inspection Notice once.
If no repairs are asked for within the 10-day period, you will be agreeing to buy the home as-is. Once you submit your request, you will wait for the Seller’s Response. The seller has five days to submit a response.
• If the seller does agree to make all of the repairs, you will be locked into the contract and the inspection period will end.
• If the seller only agrees to make some of the repairs, you will have 5 days to decide if you want to move forward or walk away from the deal. If you agree, the seller will be required to make the repairs by 3 days before escrow closes.
What About the SPDS?
The SPDS (Seller Property Disclosure Statement) should be given to you within 5 days of signing the contract. The SPDS will provide you with a lot of additional information that you should consider during the inspection period.
Again, if something in the SPDS does not meet your standards, you can cancel the contract. Buyers have 5 days to cancel after receiving the SPDS and will be given a full refund of their earnest money,
After the Inspection
Once the inspection period ends and you’re locked into a contract, there’s a very good chance that the transaction will close successfully. If you will be borrowing money to cover the cost of the purchase, you will need to have an appraisal performed to ensure that the value of the home is in line with the sales price. An appraisal will cost between $300 and $400, and the lender will charge you this fee in advance.
In the final day or two before closing, your real estate agent will walk you through the home one last time to verify that all of the repairs have been made and there has been no damage to the home since the contract was signed.
If everything looks good and all of the agreed upon repairs are made, the closing should go smoothly, and you’ll be in your new home before you know it.