Five Considerations Prior to Canceling a Contract Due to an Inspection
I know that feeling, that ache at the pit of your stomach. A couple of days ago you were high on life, winning a multiple offer situation on what you thought was your dream home. Then came the inspection and it did not go as planned. There were a myriad of problems with the home you didn’t expect. Your initial inclination is to back out of the contract as you don’t want to buy a lemon and live like Tom Hanks was living in “Money Pit”. I understand that feeling and have been there before having bought multiple properties. Yes, even home inspectors get confused about how to proceed on whether to buy a home or not as there is always uncertainty in any transaction.
I am writing this post because before you decide to terminate the contract, I wanted to give you some things to do and consider prior to terminating the contract too quickly. I hope my experience as not only a home inspector but also a homeowner, can guide you through the process of making the right decision for you and your family.
1) Remember Why You Like the Place
Most likely, you didn’t just decide to place an offer worth several hundred thousand dollars or even much more for the place on a whim. There were probably several key reasons you felt strongly about this property in the first place. You liked the location and size of the yard and those two may be hard to find again in that combination. The real estate transaction process is like riding a very up and down emotional rollercoaster, so when you are down it is important to remind yourself of the high points and find some sort of middle ground.
It's important to remember you may not find another place like this property if you do walk away. Even if you found it your very first day of seeing properties, it does not guarantee finding the next place will be as easy. Review your list of must-haves again and see where this property checks those boxes or doesn’t. Doing this will get you a little more grounded and not just focused on everything wrong with the property.
2) Make Sure You Really Understand the Items in Question
You are thinking about backing out most likely because there are several items in the inspection report you are concerned about. Sometimes an inspector will explain them on-site but when you see them in the report you get freaked out. It's a tall ask for any inspector to write a couple of sentences on an issue and really properly explain the problem to a home buyer. If you have a concern about an issue, the first thing I would do is call your inspector to ask for more information about his findings and recommendations. A good home inspector will appreciate the call and wants you to understand the issues fully. I honestly wish we would get more calls from clients, because we really want to make sure they are making the best decision for themselves.
3) Get Quotes and Second Opinions on the Issue
You will see the word “recommend further evaluation by a licensed contractor” probably several times within a report. While an inspector is usually at a site several hours or even more for bigger homes it's important to remember that inspectors have a lot of items to inspect and can’t do a deep dive on every item found. Additionally, while home inspectors are experts in knowing about every system of the home, our expertise for a certain system is not that of someone who specializes in that system. An example of this is an electrician is going to be better at diagnosing an electrical issue and what needs to be fixed.
Your inspector will find a symptom of a problem, but like your primary care physician, we will refer you to a specialist who can further evaluate the issue more effectively. This is why it is so important to get quotes and second opinions from license contractors after an inspection. They may be able to find a simpler solution to fix the issue and ultimately ease your concerns about what the issue would cost. Also, there is peace in having a little more certainty for what needs to be done next, it will make the decision clearer to you.
4) Listen to Your Fears and Discover What You Actually Want
Like I said, any real estate transaction is an emotionally charged one. It is important to understand that it is natural to have emotions. You need to identify the fear you are having that is causing you to want to back out of the contract so you can truly understand what you really desire. Sometimes that fear is not exactly what we think it is. I had a very intense negotiation period when I was purchasing my current home. I demanded several things in my attorney letter to be credited for or fixed. The home was 30 years old and had never been updated, so I expected some issues to pop up, but there were things I knew as a home inspector that were things that should be rectified to prevent future issues. The seller didn’t see things that way.
At first, I thought my fear was that I was going to be spending a lot to repair the items I really wanted to be fixed to prevent bigger issues. With further reflection, I realized my bigger fear is what would people think of me as a home inspector buying a home with issues like this. Once I identified that fear, I was able to see that I wanted the house despite these issues as it was truly a place I could see my wife and I raising our family and creating lasting memories. That is why it is important to identify the root of the fear as it can greatly change your perspective in a moments time.
5) Take Responsibility for the Decision
When a decision this large looms over someone, people tend to look at outside sources for guidance but also in cases want other people to tell them what they should do. Your realtor, inspector, lawyer, family, friends, or the guy at the McDonald’s drive thru can’t and shouldn’t make this decision for you. Taking full ownership of the decision as stupid as that sounds will empower you to make a decision. Listen to your heart and make a call. If you do still decide to walk away, it is important to understand why you made that decision.
I have a feeling that a lot of time people walkaway from a deal cause they realize that the home was not really the one for them. It happens as sometimes you see a house for 15 minutes and then need to win a multiple offer situation and you get wrapped up in winning something you kind of liked, but were not in love with. Take responsibility for that and tell your realtor so you can have an honest conversation. It will help filter your lens for the next time you place an offer on a property.
Summing it All Up
Deciding whether or not to buy a home is a daunting task for anyone, so I hope this advice helps guide you into understanding yourself a little better and what you really want from the situation. For a decision this big, you really need to listen to both your heart and your head and figure out what is really going on. At the end of the day, you need to trust yourself and what you want for your life. Just like anything in life, there is no perfect right or wrong answer. You will still have ups and downs in your property and dealing with homeownership issues when you move in, but that is true for anything in life. Your dream job still will require you to do somethings you don’t like doing, and the same for your dream home. My last bit of advice is to embrace that fact and it will make homeownership something that brings joy to your life.