Acceptance As Is: This is a modern variant of "Let the Buyer Beware." The inspection report identifies areas of possible concern, but the buyer chooses to close on the property anyway after asking their inspector the extent of each issue. Unless there is a major structural concern, this is often an option for property that is desirable and priced right, particularly in a strong market. Many buyers fully intend to make changes to a home, either immediately or over time, and are perfectly willing to overlook minor annoyances.
Negotiate to Gain a Desirable Outcome: Many buyers are aware of minor shortcomings, whether they include a leaking hose bib, a non-working vent hood, an aging air conditioning compressor or a faulty electrical circuit. Sometimes, buyers may suspect a problem, but they don't take the initiative to deal with it prior to listing. Usually, they are more than willing to fix minor items like weatherstripping or shower tile grout without question. If an inspector notes evidence of a persistent water leak, termite damage, roofing problems or foundation settling, however, serious negotiation might be required.
When a specific dollar cap is attached to the inspection contingency, a seller is never obligated to exceed that amount. On the other hand, the buyer still retains the option to close or cancel the contract, whether repairs are completed or not. Also, an inspection report will not typically include dollar estimates. Determining the cost to remedy deficiencies is left up to buyer and/or seller.
In some cases, savvy sellers will offer a concession amounting to thousands of dollars for updating, repainting, carpet replacement or landscape allowance. This is almost always separate from the inspection contingency.
Rescind the Contract: In the event that a potential buyer chooses to walk away, the contract becomes null and void, and the buyer's earnest money is returned. However, in most states, the legal requirement for disclosure of deficiencies falls then to the seller and the seller's real estate agent. It's a serious breach of ethics to hide known property faults and in some cases, non-disclosure is cause for legal action.
The Need for Agreement
As with other contingencies that are part and parcel of a real estate contract, both parties must agree to all the terms surrounding inspection, including timing and financial details. The timing of actual repairs is usually open to negotiation. In some locales,
however, depending on the specifics of deficiencies to be corrected, a re-inspection and certification of current condition is made a part of the requirement. In those cases, the work must be completed prior to closing.
In other cases, the buyer may request a reduction in contract amount or monetary concession at closing in lieu of repairs. Sometimes funds are escrowed so that a new roof or driveway repairs can be delayed until a seller moves out, with completion scheduled prior to buyer move-in. Such an arrangement minimizes lifestyle disruption for both sides. Overall, getting to closing can require some give and take! The more you know about the process, the better equipped you will be when things get complicated.