05/04/2023
How & When to walk away after a bad inspection.
The how of it is pretty simple. GET an inspection contingency added at the time your agent drafts your offer. Yes, you can back out without one but having it is simple and much easier. Also it protects your earnest money!
So when should you walk away? Besides major electrical issues, which can be very expensive to deal with, there are 6 major issues to consider when they come up IMO.
1) Faulty Foundation. The foundation is not necessarily easy to repair or inspect. Repairing a faulty foundation could hit the wallet at 10's of thousands of dollars depending on the exact damage. Always consult a structural engineer if serious foundation issues come up in an inspection report. The estimate may be so high that you want to walk away.
2) Termites. These little guys are terrible in our area. They are one of the worst things to have come up in the inspection report. If they pop up seek out a termite inspection immediately! This inspection will evaluate the scoop and extent of any damage present. Termites can cause major damage quickly and repairs can cost thousands of dollars.
3) Water damage. Water damage isn't always a reason to back out. Some damage is very inexpensive to fix. BUT if there is a mold issue caused by the damage the issue and cost may be extensive. You will want a professional to conduct a special inspection of the water damage and any mold. This is imperative for health reasons as well as costs to repair. There may be soft spots in the walls and floors that require repair as well which lead to even more costs out of pocket.
4) Roof issues. Roofs are expensive to replace. They require regular maintenance to prolong their usefulness. Some repairs are inexpensive but if the inspector recommends a roof replacement you should probably ask the seller to lower the price, fix the roof themselves, or walk away.
5) Un-permitted work. This is not too much of an issue on unrestricted land but, on land that is zoned, this is a major issue. If the previous owner did un-permitted work, you could be on the hook to pay to get the work up to code. The city could also apply fines that you would be responsible for.
6) Title Issues. During the buying process a title search will be conducted. This ensures there are no claims to ownership or liens on the property. The first problem here is that the seller cannot legally sell the property without clearing up the issues. The other issue is that, if the property is unknowingly sold despite a title dispute, you could lose the property if a legitimate claim comes forward. If this happens you are out the house as well as the money you have spent!
Michelle Hatfield
EXIT Royal Realty
205-294-4624
