First Time Home Buyer Series - Part 7: Inspection Period

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At this point, you set your budget, got prequalified, went house hunting, and successfully negotiated an agreement on your first house! The next step is to investigate everything we can about the house to make sure it is in acceptable condition.


Inspections

It is up to the Buyer to do any desired inspections. Assuming we have a due diligence period, we have the opportunity to learn as much as we can about the house before we have to make the final decision to move forward with the purchase.


Home Inspection

• The first step is to get a home inspection. Home Inspectors are highly educated professionals who look at houses all day, every day. The in depth inspection will help us reveal issues and areas for improvement. A home inspection typically last 2 – 4 hours, and I recommend that the Buyer attends, if at all possible. Remember, even the best home inspectors can’t find everything!

Termite Inspection

• Termites are everywhere in Georgia. Once, I heard a termite inspector say, “There are two types of houses in Georgia – those that have had termites and those that will!” A termite inspection will check to see if there are any active termites in the house. If so, the house will need to be treated. We can often ask the seller to make this repair. In older homes, it is common for the inspection to reveal previous termite damage. That may not be an issue if the termites are not active and have not caused any structural damage.

Radon Test

• Radon is a naturally occurring element that seeps out of the ground. Georgia has some areas that are prone to elevated radon levels, and this can be dangerous. Your home inspector can set a test to analyze the radon levels in your home. Check out the EPA’s Home Buyer’s Guide to Radon for more information.

Survey

• A survey is not required to purchase a property in Georgia. However, it is the only way to truly know the exact property lines. We can talk through whether or not you should get a survey, but you should definitely consider one if you are planning on installing a fence, pouring a new driveway, or have any questions about the property boundaries.

Contingencies


Contingencies are clauses in your contract upon which the purchase is contingent. That means that if these criteria are not met, you can exercise the contingency to terminate the purchase. These contingencies usually have a time limit and specific requirements. Below are some common contingencies:


Due Diligence

• The first and most powerful contingency is the Due Diligence Period. The purpose of the Due Diligence Period is to conduct your inspections, make sure the house is in acceptable condition, and negotiate any repairs or concessions. This negotiation is completely separate from the original negotiation. The Buyer has the right to ask for anything to be done to the house. The seller has the right to counter and do all, some, or none of the items. However, the Buyer has the ultimate right to terminate the contract if they are not satisfied.

Appraisal

• An Appraisal Contingency is a common addition to real estate contracts. This contingency states that the property must appraise for the purchase price or higher. This protects the Buyer. If the property does not appraise for the purchase price, then the seller has the choice to drop the price to the appraisal value or they can allow the Buyer to walk away without penalty. If the Buyer is getting a loan to purchase the home, the lender selects the appraiser. Otherwise, the selection of the appraiser is a negotiable point.

Financing

• A Financing Contingency gives the Buyer time after going under contract to get their loan approved. This contingency states that if the Buyer does not get approved, then they can terminate the contract without penalty. Before we started house hunting, you were pre-qualified for a loan. Now that you know what house you are buying, it is time to get actually qualified. This requires you to turn in a plethora of financial documents to your lender. Basically, they are verifying the information you submitted during the pre-qualification. If for some reason you do not get approval at this point, we can exercise the Financing Contingency to terminate the contract and get your earnest money back.

Does this seem like a lot to do? Don’t worry, we will make sure you know how to take each step of the process. After we navigate the inspections, due diligence, and any contingencies; it is time to finalize the loan, tie up any loose ends, and get ready for closing!

Justin Landis
Keller Williams Peachtree Road
404-803-0471
justin.landis@kw.com