Selling: 8. Home Inspection and Amendments

Getting closer . . .

Typically, within about 10 days from the execution of your agreement, the buyer has the right to schedule a home inspection, which is usually done by a certified professional. The home inspection will look at the major systems and components of your home. An agreement is usually contingent upon buyer's acceptance and approval of a satisfactory home inspection. The buyer may ask you to address some items as a result of the home inspection (see amendments, below). If any changes requested by the buyer are required to be made before sale and you do not make them, then the buyer has the right to withdraw from the agreement.

Appraisal
Usually after a home inspection and while the buyer is arranging their financing, they will have an appraisal scheduled, and you may need to make arrangements to meet the appraiser. Because the appraisal is necessary to financing by the buyer's lender, if the home does not appraise for at least the amount of the sale price, then the buyer also has the right to withdraw from the agreement. Similarly, the lender will check the property for any liens.

Amendments
As the buyer and seller work through the timelines in their agreements, review the documents, work with lenders and the title insurance company and go through the home inspection, various additional contingencies may want to be considered by either party. Amendments may be proposed at any time - typically by faxing to the other party an informal letter of request. A specific amount of time (a day or two) should be specified for acceptance or rejection of proposed amendments, and if that time frame is not met, then the entire agreement may become null. Once an amendment is agreed upon in clear, simple terms, you need to have a document (PDF) with both buyer and seller signatures on it to become part of the agreement. As always, you need to obtain your own competent legal advice.

As previously advised, if you've followed the FSBO Formula that we outline, you've already discounted the price of your home for what average amendment requests for changes would ask. The buyer, for example, might have a home inspection and find out that the hot water heater needs replacing. Rather than delay the process, you've already incorporated the savings into your asking price and can reasonably consider rejecting amendments such as these. If you have not followed the FSBO Formula, and/or you've put your own padding on top of your asking price, then you will probably slow down the process with the consideration of amendments and price adjustments. If you've got major, more significant issues - like a falling roof, for example - then they might not be 'normal or average amendments' and you'll consider requests to have issues fixed before sale or to lower the sales price.

Rejecting Amendments
Please provide an explanation for any rejection or compromise of an amendment in writing. If you reject a buyer's proposed and reasonable amendment to the agreement, then the buyer may have the right to withdraw from the agreement. Time is of the essence in a real estate sale, and it's generally not a good idea to get into a lot of back and forth, considering multiple amendments - unless they're truly absolutely necessary to finish the transaction.