peacemaker

When should inspections take place?

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Should inspections on a home take place before or after contracts?

-Thanks

before, that way if anything needs addressing it can be done before your contract is written.

you dont want to waste your time if the home wont pass a inspection or meet your lenders standards, you will be out the inspection fees however, but better knowing whats wrong now , than later

Edited by cbairey

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After the contract is signed. Even if you do the inspection before a contract is signed, somebody has to pay for the inspection and I doubt the Seller is going to pay for it, even though that could be negotiated but im not sure that is standard.

But in the contract you specify the length of the "Option Period" (normally 10 days) in which the Buyer is able to get out of the contract and reclaim earnest money. You pay for the Option Period which is $25-$100 and you don't receive this money back as it is a cost to have an Option to get out of the contract.

I've been looking for a house since March and had a contract on a property until the Seller decided they didn't want to sell last week. Anyway, in our contract we specified an Option Period of 10 days, starting on the day everyone signed the contract. We had the house inspected the next day (even though you can do it anytime within the 10 days) and we asked the seller to make some repairs. If the Seller refuses, then you excercise your Option and terminate the contract, get your earnest money back and go get search for another property.

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It may differ by state, but for us the accepted offer or counteroffer always included an inspection as a contingency and outlined who should pay for it, and then allowed for negotiation of the final contract terms based on the inspections findings... ie; it should be a clause in the pre-contract.

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Dito on all of the above. Home inspections you can use to lower the price.

When you are buying a property - most of the time the seller is trying to get the highest price, you want to negotiate for a lower price in three steps.

You present you first offer stating you are interested in the property. The first offer is around 30% less - "you are asking to lower the selling price". This is a lot to ask for, but in this day and age, it's a buyers market out there. If they want to sell the home, they will come down. Your second offer is 15% less than the modified price. Then last offer is met half way. Remember nobody is going to hold you hand during the dealings. All they can do is say yes or no.

Next you want till inspect the property by a licensed home inspector (around $300). Items turned up that needs repair, you can use to to lower the price even more.

Also check out what are homes are selling for in the neighborhood. Check out http://www.cyberhomes.com/

Eight years as a loan officer, wrote loans for 100's of purchases.

Good Luck.....:)xdancex:)

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Sounds about right. When we bought our principal residence in 2005, the post-contract inspection turned up a few little nuggets. We asked for a few thousand in credits. They said "$500 or no deal- final offer". We took the $500 and bought the house. This was in the midst of the strongest seller's market in history.

When I bought the rental in 2007, the post-contract inspection turned up about $8000 in immediate repairs. I asked for $8000 or I told 'em I'll walk. I got all $8000. Clearly we were in a buyer's market.

The inspection is used as leverage and sellers know it. How much leverage you actually have depends on the strength or weakness of the housing market in your area.

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I just finished negotiating with the Seller and looks like I will have a house under contract tomorrow.

Anyway, one thing I wanted to add is that one of the MAIN reasons I would get the inspection after the contract is signed (as stated previously, make sure you specify an option period to get out and that the contract is only if the house passes inspection) is that you want to get that house under contract as soon as possible so the Seller stops showing the property.

Me and the seller have agreed verbally. I want to prevent other people from submitting offers as soon as possible so I try to get a contract as soon as possible. I know I will have to pay Option Money, so I know I can get out of the contract if something goes wrong during the option period and theoretically after that if you can't get financing.

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You don't need to pay option money! The purchase is typically contingent on two things: 1) the availability of financing at or below x.xx% to the buyer and 2) the home inspection report. You, as buyer, have a good faith effort to obtain financing (ie can't sit on the couch and then back out by claiming no financing). And if the seller agrees to make all necessary repairs or fully pay for them as a credit, then you can't back out based on the home inspection either. This is done via the contract.

Good luck.

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From what I understand, in Texas, the Option Period is fairly standard. This pretty much removes the grey area as far as the Buyer getting his/her earnest money back.

If you opt out of the contract during the Option Period, you get your money back if you opt out after the Option Period expires, you don't get your money back even if the reason is that you couldn't obtain financing.

Before the seller decided to back out of this last deal, I had to pay $25 for a 10 Day option and we even extended it 5 days after that. That was well worth the money as it gave me 15 days to really be sure that I wanted the house without putting my earnest money in jeopardy, which I only paid $500, but it can get pretty high.

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You don't need to pay option money! The purchase is typically contingent on two things: 1) the availability of financing at or below x.xx% to the buyer and 2) the home inspection report. You, as buyer, have a good faith effort to obtain financing (ie can't sit on the couch and then back out by claiming no financing). And if the seller agrees to make all necessary repairs or fully pay for them as a credit, then you can't back out based on the home inspection either. This is done via the contract.

Good luck.

I agree - you don't need to do a pay option. You can simply write a $100 check for the earnest money. This a an agreement that the seller takes the home off the market, and you are serious about buying the home.

One endeavor I tried to keep when I was a loan officer. Keep the loan simple.

:):):)

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