Inspection period

[Garrette Becker]

hello, 

I have a question about something iv seen a lot on here but I haven't seen in any books iv read about wholesaling. I am wondering what the inspection period is, what it's for and pretty much anything else about it. I know it's kind of a broad question so any info helps, thanks.

[Jeff Copeland]

It seems like no one has answered your question yet. The inspection period is a common "contingency" in an offer to purchase real estate (a financing contingency being the other most commonly used).

When you make an offer, you're basically saying, I'm offering to buy your property for $100k, and I'll put up $1k (these numbers are made up) as earnest money or an escrow deposit. If you accept my offer and then I break the contract, you get to keep my earnest money (that's why more earnest money generally equates to a stronger offer).

Then you can add contingencies, such as:

Inspection Period - I want 10 days (or whatever amount of time you negotiate) to thoroughly inspect the property. If I find anything wrong with it or any surprises (or my repair estimates come back too high), I can back out  of the contract and not lose my earnest money.

Financing - if I am unavailable to get financing at acceptable terms, I can back out of the contract and not lose my earnest money.

There are very legitimate reasons to ask for an inspection period (for example, maybe the utilities are turned off and you are unable to inspect plumbing, electrical, or HVAC without them being on). 

But some investors (sometimes on the advice of "Gurus") make lots of offers without seeing a property, then use the inspection period as an "out" while they tie up the property for wholesaling or whatever.

As a seller, an offer with no inspection or financing contingency is much stronger than a comparable offer with these contingencies included, so use them wisely.