Buyer Home inspection & contingencies

7 Replies

I am in the San Francisco Bay Area and I have an offer letter accepted for a house. When I made the offer it was with no contingency and the seller provided a home inspection. The no contingency was suggested by the realtor since the market here is really competitive and heard that most of the ones with get contingency get passed.

I have not turned in the money to the escrow yet but I just realized that it doesn’t have time for me to do another inspection before closing and a bit worried in case the financing somehow falls through. I am wondering if sellers inspection is a reliable.

It seems like I have the risk of losing money if the financing falls through or if the house has some major issue that their inspection does not mention.

Looking for advise if people are in the same market. There is 4 more backup offers waiting on the house so also a bit hesitant to see if we could change some terms.

Hi @Gary Wong -

Have you voiced these concerns with your agent?  If they were the one to recommend coming in with no contingencies, they should be able to talk about the associated risks...

If your offer was made with no contingencies, as soon as you deposit the earnest money, it is at risk if you cancel for nearly any reason.  And, if you did the typical 3% at Bay Area prices, that's going to be a hefty amount.

Was your offer made with absolutely no contingencies?  Or, did you simply waive the inspection contingency?  In general, there are three primary contingencies that we deal with: 1) inspections, 2) appraisal and 3) loan.  They each protect you from different aspects; however, the appraisal and loan contingencies are very specific in what they cover whereas the inspection contingency provides you with a more generic safety blanket.

If you're getting a loan for the property, you absolutely should have enough time to have another inspection completed before you close.  However, if you waived the inspection contingency, your earnest money deposit is at risk regardless of what your inspector finds (even if it was something missed by the first inspector).

Not knowing who did the original home inspection, there's no way for any of us to say whether that information is reliable or not.  However, there's a separate issue for you to consider ... since that report wasn't performed in your name, you have no legal recourse against that inspector should they have missed something due to their own negligence.  Because of this, even when my clients make a non-contingent offer, I still suggest for them to get an inspection done in their name.  They can do this one of two ways: 1) if they liked the original inspector, you can have them come back out and perform a re-inspection - it takes less time and, generally, costs less, or 2) bring out a new inspector and get a second opinion on everything - which is what I, personally, would do.

First thing I'd recommend is talking to your agent about all of this.  If you're not happy with that answer, provide us with some more specifics and we can point you in the right direction...

Good luck!

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@gary wong

@Gary Wong

Don't be mad............but I don't care if it was "New Construction" in Pacific Heights.....I have never done something without an inspection contingency. Yes the market is hot....I know someone who paid $2.2 Million for a place in an "A" neighborhood in The City with no inspection contingency......VERY hot market............and right about 11 months and $600,000 later they are finally just now moving in.

I'm surprised the offer in this hot market was accepted with a financing may want to think about that and marinate on it....why was your offer with a financing contingency accepted if it had no appraisal contingency....

Think about that my man.

@Brian Garlington

Thanks for the advice. I ended up backing out of the offer since there were too many uncertainties which I did not feel comfortable with. I think I would rather this be done earlier than regret it after the earnest money is in.

Don't "chase" the market. ALWAYS put in an inspection contingency AND and Appraisal Contingency. If your Realtor tells you this isn't a good idea in a "Hot Market", go find another Realtor. I'm guessing this was a Single Family Home and not a duplex/triplex or fourplex?