The posting below is a copy of an article published in Boca/Delray Life Magazine in March of 2006.

In last month‘s article we went over real estate contracts, contract contingencies, disclosures and the structuring of contracts. This month I’d like to get a bit more detailed about a specific subject in the contract which is probably least understood and which leads to the most problems, the seller warranty and the home inspection.All contracts allow a buyer to conduct a home inspection. It’s a good idea to have a competent home inspector do a thorough inspection to determine any and all issues with a property. The obvious reason for an inspection is to insure you, as the buyer, get what you’re paying for, which according to the contract is a home with all systems in “working condition” but this definition many times becomes a source of dispute. For instance an air conditioning unit may be near the end of its useful life and not cooling as well as it should. As a buyer you may think this item needs to be replaced or at least repaired whereas the seller says the unit is cooling the home and is in “working condition” and doesn’t need to be replaced or repaired. A good agent can explain the contract and structure a contract to protect your interests. Other reasons for an inspection are to determine if there are any structural issues with a home or health concerns, such as mold.

When selling a home it’s important to decide whether to sell the home “As Is” or if you’re willing to undertake repairs of warrantable items uncovered in a buyer’s inspection report. The dollar amount of repairs a seller is required to make is negotiable. There are pros and cons to either approach and much depends on your particular situation.

Most sellers offer their home “As Is” to avoid the expense, time and hassle of negotiating and making repairs. The one problem with this approach is that the buyer has the right to inspect your home and can cancel the contract for any reason, which means you don’t really have a solid contract until the inspections are complete and the buyer waives their right to cancel. Depending on the contract this could be anywhere from a week to several weeks. In the meantime if another home comes on the market which the buyers like more they may just walk away.

To avoid the problems associated with selling “As Is” you could elect to offer your home for sale and agree to repair warrantable items up to the limits agreed to in the contract. Under this option the buyers still have an inspection, however they cannot cancel the contract. The problem with this path is the seller may be obligated to undertake repairs which could run into thousands of dollars, depending on the repair limits agreed to in the contract. I always advise my seller clients to consider paying for their own home inspection and making the necessary repairs to avoid any surprises and to prevent any problems or delays with the closing.

Just as the home seller considers under what conditions to offer their home for sale, a buyer must consider under what conditions to buy and how to structure the purchase contract to protect their interests. Standard contracts are a great starting point but a good agent will structure a contract to address your concerns and allow you the flexibility to cancel ANY contract under the right circumstances.

(Please note that all aspects of this subject cannot be addressed in such a short article. Do your homework and seek the advice of a professional.)

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