Home Inspection and Other Tests

Once you have mutual acceptance your next steps will be driven by the terms on the agreed contract. The first item to deal with will usually be the buyer’s inspection. The inspection is a right of the buyer and is conducted immediately (2-7 days) after the offer is accepted. The purpose of the inspection is to provide the buyer with knowledge and assurances about the condition your house. In many cases, the mortgage company will require an inspection to be preformed by a licensed inspector prior to approving the loan. Either way this is one of the contingencies that if not met to the buyer’s satisfaction will allow him/her to legally break the contract for good cause. Inspectors are independent contractors whom are hired to give an accounting of the condition of the house. Inspections can be limited to a visual inspection or as detailed as a structural one with written analysis and recommendations for items needing repaired or updated. In both cases, you and the buyer should have sufficient knowledge after the inspection to decide what items you will agree to repair (if any) or if the house will be sold in its current condition. Once again the language in your original contract will govern the buyer’s and your response and time limits.

Also around this time, the mortgage company or bank that the buyer is working with will conduct what is know as an appraisal of the property. This will be done by an independent firm specializing is residential appraisals. They will visually inspect the house and use sales data for similar houses in the area of the same age, condition and features, and arrive at an independent market price for the house. The bank will use this as the basis for justifying the amount of the loan. In most cases, this amount will be very close to your agreed price with the buyer. In some cases, homes may have sold for a price well above the value of the house as it compares to comparable properties in the area. If this is the case, the bank may not loan the buyer the sufficient amount to close on the property and you may be asked to renegotiate the price of the house with the buyer or for the buyer to come up with more cash down.