In North Carolina on the offer to purchase contract the buyer has two options in regards to home inspections. But which one is the best alternative for me? That question was posed to me last evening on an offer I was writing. I have given a lot of thought to this in the past and weighed in on both the pros and cons of each one.
Currently, a buyer can choose between option one or option two for a home inspection clause. Option one says that they will have the home inspection done in X amount of days and that they can request the seller to do "necessary repairs" as outlined in the small paragraph. If it is outside of the scope of those repairs and the seller refuses to do the repairs or offer any compensation for such repairs the buyer is bound to purchase the home.
Now, there is one other contingency clause to that which is the cost of repairs. If the necessary repairs exceed a set dollar amount (negotiated in the offer to purchase) the buyer can still walk away even if the seller agrees to fix them. However; if it is out of the scope of those necessary repairs regardless of the cost the buyer is bound by the contract.
On option two the buyer pays the seller a flat fee. Generally, I have done from $50.00 to $100.00 fee (depending on the price of the home). This is a non refundable fee that the buyer gives the seller in order to have the right to have a home inspection and any other inspection they wish. The seller agrees to take the home off the market during that time frame. If the buyer does not like what the home inspection reports read he can walk away no questions asked. They can also request that the seller make the repairs to the home. If the seller refuses to make the repairs or make and contingency for the repairs the buyer still has the option of walking away.. They just lose their option fee deposit.
If the buyer and seller agree on repairs or buyer accepts property in current condition the option fee is applied to the purchase price. Thus if the buyer goes forward with the contract he does not lose that money.
So, which one is better? I have been advocating for Option two with all my buyers. You have such a narrow scope of "necessary repairs" on option one. With all the hidden things that we can not notice the cost to repair could be to dramatic for the buyer to repair. In addition you may have some issues that are not in need of immediate repair but in the near future will need repairing...These are things that the seller in not required to do on option one and could be more than you could afford to do with the new home.
As I tell my buyers, "is $50 to $100 worth the peace of mind of knowing you can walk away if the unexpected repairs seem to be too costly for you?" Generally speaking it is. With over half of the buyers ut there right now (according to a recent study I read) being first time home buyers they may not have the extra money needed to do the repairs or maintenance to the home.
Dave diCecco
Realtor/Agent
www.davedicecco.com
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