So, bear with us on this one…because a Home Inspection is a very detailed, and very important part of the home buying process and it warrants a good, if lengthy, explanation. If you wanted to know more about the Home Inspection period, you’ve come to the right blog post!

What is a ‘Contingency’ in an Arizona Purchase Contract?

The Arizona purchase contract specifies that certain contingencies must be met before the purchase of a home can be finalized. But first, what is a contingency? In real estate, “a contingency refers to a clause in a purchase agreement specifying an action or requirement that must be met for the contract to become legally binding. Both the buyer and seller must agree to the terms of each contingency and sign the contract before it becomes binding.” *

The Arizona purchase contract contains several contingencies such as the Loan Contingency that states that the buyer has the obligation to obtain final loan approval three days prior to the closing date. Obviously, if the buyer’s loan doesn’t go through, the deal falls apart. There is also the Appraisal Contingency. If the appraisal comes in lower than the purchase price, the buyer has the option to cancel the contract and receive a refund of their earnest deposit.

What is the ‘Inspection Period Contingency’?

A crucial contingency for buyers is the Inspection Period Contingency. This mandates that the offer is contingent on the result of the home inspection. It allows the buyer ten days to perform any and all inspections they deem necessary. In fact, the items a Buyer is allowed to investigate is pretty comprehensive.

Section 6a of the purchase contract states: “During the Inspection period, Buyer, at Buyer’s expense, shall: (i) conduct all desired physical, environmental, and other types of inspections and investigations to determine the value and condition of the Premises; (ii) make inquiries and consult government agencies, lenders, insurance agents, architects, and other appropriate persons and entities concerning the suitability of the Premises and the surrounding area; (iii) investigate applicable building, zoning, fire, health, and safety codes to determine any potential hazards, violations or defects in the Premises and (iv) verify any material multiple listing service (“MLS”) information. If the presence of sex offenders in the vicinity or the occurrence of a disease, natural death, suicide, homicide or other crime on or in the vicinity is a material matter to Buyer, it must be investigated by the Buyer during the Inspection Period.” **

It’s Important To Hire a Licensed Home Inspector

Many homebuyers lack the experience and knowledge to know whether a home is in good condition or not. A trained and certified inspector is your best bet for performing the home inspection. They can uncover a home’s issues and potential major defects. Based on their training and expertise, they provide the buyer with their professional opinions of a home’s major systems.

What The Home Inspection Covers

A standard home inspection will go over the home’s structure, appliances, and major systems. The following is a list of what is typically included in the inspection.

Exterior Inspection

The inspector will inspect the entire exterior of the structure including crawlspaces, attics, additions, and will include the following:

  • Walls: Exterior wall construction can reveal a lot about the foundation and interior of the home. The inspector will look for damaged or missing siding, inspect cracks and suspected settling, and will check the soil around the home to ensure there are no major leaks or pests present.
  • Foundation: The inspector will walk around the structure to look for areas that might have poor grading and will look for cracks and separations to evaluate any evidence of foundations issues.
  • Roof: Loose, missing, or poorly installed shingles, and cracked or damaged vents and pipes are all ways that water can enter the home. The inspector will note any areas that may be prime targets for water intrusion.
  • Grading: The inspector will look to determine if the grading slopes away from the home as it should. Homes with improper grading can have water accumulating around the base of the home causing potential damage and pest infestation.
  • Garage: The inspector will test the garage door to ensure it operates properly. They’ll also check the framing to ensure it’s sealed properly to deter pests and water intrusion.

Interior Inspection

The interior inspection includes everything on the interior of the home from the electrical system to the water pressure and will include:

  • Electrical systems: The inspector will identify the kind of wiring present throughout the home. They’ll test the outlets and ensure there are functional ground fault circuit interrupters (gfci’s) installed in the bathrooms, kitchen and garage.
  • HVAC system:  The inspector will identify the type, size and age of the furnace and air conditioner of the home. They’ll test the vents to ensure that the air splits are correct and ensure the systems are working properly. 
  • Plumbing: The inspector will check the water pressure in all faucets and showers. They’ll check under sinks and in cabinets to note any leaks or potential plumbing issues. They’ll also check to ensure that the toilets are properly secured and that there is proper ventilation.
  • Fire safety: The inspector will check all smoke and carbon monoxide detectors to ensure they’re in good working order. If there is an attached garage, they’ll check that the door connected to the house is fire rated and that it closes automatically. They’ll also check to make sure the attic access is made of fire rated material.
  • Water heater: The inspector will identify the water heater’s age and condition. They’ll check to see if the plumbing leading from the water heater is adequate and made of the proper materials.
  • Appliances: The inspector will check the major appliances to ensure they are working properly. They’ll make note if the stove doesn’t have an anti-tip device and if the dishwasher is plumbed properly.

The Home Inspection Report

Once the inspections are completed the inspector will send you and your real estate agent a detailed report of the inspector’s findings. The report will include the inspector’s professional opinion of the condition of the home along with photos and recommendations. It will include the status of any problems noted whether they are a safety issue, a major defect, or a minor defect, recommendations for replacement or service for appliances and systems, and detail any recommended repairs that need immediate attention.

Next Steps

Your real estate agent will discuss the home inspection report findings with you so that you can decide if you want to ask the seller to make repairs. It’s a good idea to choose to ask for the repair items that are red flags or safety issues. These could include roof leaks, HVAC issues, electrical problems, or plumbing issues. Sellers are more likely to be willing to address significant issues but could dig in their heels if a buyer asks for a long list of mostly cosmetic issues.

Once you’ve decided on which repair items you’d like to request, your agent will prepare the repair request form or BINSR. BINSR is an acronym for Buyer’s Inspection Notice and Seller’s Response. The BINSR gives the buyer several choices.  The options are:

  1. To accept the premises in its present condition with no request for repairs.
  2. To reject the premises due to specified problems that must be listed, and cancel the contract.
  3. Provide the seller with the opportunity to correct the problems listed.
  4. Offer to accept a credit from the seller of a specified amount in lieu of the repairs.

You’ll sign the BINSR and your agent will forward it to the listing agent.

Remember, you only have 10 days to perform your inspections and submit your repair requests to the seller. If don’t you don’t ask for any repairs within the 10-day inspection period, you have automatically agreed to buy the home as is.

Seller’s Response

After your agent sends your request for repairs to the seller, the seller has five days to respond to your requests. They can respond in several ways:

  1. They agree to do all the requested repairs.
  2. They agree to do some of the repairs but not others.
  3. They refuse to do any repairs.
  4. They offer to give a credit of a specified amount in lieu of repairs

The seller will indicate their decision on the BINSR.

End of the Inspection Period

Once you receive the seller’s response to your repair requests, you now have two choices:

  1. Accept the seller’s response and move forward with the purchase or
  2. Cancel the contract and receive your earnest deposit back.

You’ll indicate your choice on the BINSR and submit it to the seller. Whatever your choice is, at that point the inspection period is over even if you have days remaining in your 10-day inspection period. If you decide to proceed with the purchase, you are now locked into the contract subject to any remaining contingencies.

The Value of the Inspection Contingency

The Inspection Contingency is a valuable tool for buyers. It allows you to “kick the tires” and make sure the home you’re purchasing is everything you expect it to be.  A home inspection will cost you a little time and money, but you will find it well worth the investment. Your professional home inspector has the ability to take a close look beneath a house’s surface and give you a comprehensive report on all the critical factors of the home.

All things considered, a home inspection is a small price to pay for the peace of mind it provides. In the end, you’ll be glad you did it. If you have questions about Home Inspections, the Donnelly Group has the knowledge and expertise to help you through your home purchase.

Please don’t hesitate to contact our team at 480-792-9700 or by email.