Buying or selling a home involves a lot of things, it also raises questions. In this column ‘Ask Bob’, real estate expert/broker Bob Bartikoski of RE/MAX Paradise Homes Bonaire answers a real estate question from a reader. This time:
Question: You mentioned an inspection contingency in recent column, how does that work?
This is a good question, because inspections can be different depending on where you live. In some countries, buyers are the ones who determine if an inspection is satisfactory. They may expect the Seller to repair anything listed on an inspection report, or to lower the selling price to cover repairs.
On Bonaire, the terms of the inspection are agreed upon in the purchase agreement in advance of the inspection so that there is no misunderstanding between buyer and seller. An inspection contingency might have wording similar to “This offer contingent upon a technical inspection that does not identify more than $X,XXX in required repairs as determined by the inspector.” The Buyer and Seller agree upon the dollar amount. Let’s use $5,000 for our example.
If the inspection identifies structural, technical or invisible deficiencies of $5,000 or less that require repair, the purchase agreement is still valid and the seller has no obligation to fix the deficiency or renegotiate the price. If the amount of required repairs is higher than the agreed upon amount, the buyer has the option to void the purchase agreement. In some cases, the Seller will offer to pay for repair of deficiencies above the agreed upon amount to continue with the sale. If the inspection indicated $5,500 in repairs, using our example of a $5,000 contingency, the Seller might offer a price reduction of $500, which is the amount over the agreed upon $5,000.
The inspector will clearly note what repairs are required, and what items may need attention eventually, but are not required. (for example, an older airco unit which is nearing the end of its usable life, but is still in working order and does not require repair or replacement at this time.) Remember that only the items noted as “required” on the report count towards the dollar amount of the contingency, not cosmetic repairs or suggestions for future maintenance.
Please email me directly if you need more information on a specific property at [email protected]. Bonaire: +599-717-7362. Call for free from the US: 1-866-611-7362. See all our listings here.