After we’ve submitted contracts to escrow and dropped off or wired our earnest money deposit, our next step is to do our “due diligence.” Usually inspections are done in this time period.
While still within the due diligence time period (I usually set it to 15 days in our contract) , you can cancel the home purchase for any reason and get your earnest money deposit back.
Inspections
How does an inspection work?
After you schedule a general home inspection, the inspector, (I like to use a company called Watch Dog Inspectors) will visit the home and perform a “visual inspection.”
What is a visual inspection?
This involves testing all the appliances, water, electrical systems, heating and air conditioning, and points out anything that is broken or may need maintenance in the future. The inspector is not allowed to rip open walls to check for mold, but if he sees water damage, he can advise to either get it checked further, or how to clean it up and prevent more damage.
What should I do to get the most out of my inspection service?
You can meet the inspector during the inspection and ask him/her questions as well. For example, you can ask if you can knock down a wall, and how to take care of certain features of the home. Your agent can schedule the inspection so you’re able to make it to the inspection 🙂 The inspection itself usually lasts 2 hours. The inspection company will usually send us the report via pdf within 24 hours.
How does payment work?
The buyer will usually pay the inspector at the meeting or via check or card if the buyer does not go to the inspection.
The cost averages between $280-$350 depending on the size of the home. Here is a link to pricing and a sample report: Inspection Pricing & Sample Report
What happens after the inspection?
After we get the report back, we can either:
- Accept the house in the condition as it is and move forward with the home purchase, or
- Cancel the home purchase and get our earnest money deposit back, or
- Ask for repairs to be done during escrow, and/or ask for a credit from the owner instead of repairs.
This is all usually done through e-mail and paperwork with the agents doing all the communicating. So you don’t have to worry about talking to the seller directly. Just discuss what you want with your agent.
Note: Sometimes the home inspector will recommend further technical inspection of a specific type after the general home inspection. If you need further inspection of a specific type, like a mold or termite or other specialized inspection, you may also arrange these inspections during the due diligence period.
What if I want the seller to make repairs?
If we want the seller to make repairs or pay for needed repairs, we can state that in our “inspection response form.” Your agent will help you with that. At that point, the buyer can start negotiating what they want from the seller. If the seller is reasonable, they will usually agree to help out.
What if the seller won’t agree?
If for some reason you are not okay with the condition of the home within the “due diligence” period, and the seller is not willing to give enough money or make the requested repairs, you can still decide to either move forward anyway, or cancel the purchase and get your earnest money deposit back.
What if the inspection and condition are okay but I just don’t want it anymore?
You can also cancel with no penalty within the due diligence period and get all your money back as well. Sometimes you see another house you like way more and you get an offer accepted on that one. Sometimes you realize it’s too close to a road or the neighborhood doesn’t feel safe to you.
Regardless of the reason, you can get 100% of your earnest money deposit back if you decide to cancel within the due diligence period (Usually 15 days in my contracts)
I hope this article helped you learn what happens during the due diligence period and inspections. 🙂
Ready for the next step? Click here: Step 7: Reviewing HOA Documents
Need to go back a step? Click here: Step 5: Starting Escrow
If you are buying a house without an HOA with a loan, you can skip to: Step 8: Getting Your Loan Approved
If you are buying a house without an HOA with cash, you can skip to: Step 9: Home Warranty
Want to start from the beginning? Click Here: Step 1: Setting Up Your Wallet
Thanks for reading! If you think this information is useful, please share it with a friend!
Leng Lim
Las Vegas Real Estate Specialists
702-343-2670