My Home Inspection Revealed Major Issues With the House I'm Buying. Now What?

by Maurie Backman | Updated July 19, 2021 - First published on May 2, 2021

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Here are your options when a home inspection doesn't go as planned.

There's a reason it can easily take up to 60 days to close on a mortgage. Not only must your lender verify all of your financial details (a process known as underwriting), but the home you're looking to buy will also need to go through an appraisal so your lender can make sure it's worth enough to cover the loan you're taking out.

But those aren't the only things that need to happen before you close on a mortgage. You'll also need to have a home inspection performed on the property you want to buy.

The purpose of a home inspection is to uncover any issues with a property before you close on it. But what if your inspection doesn't go so well? What if an inspector discovers major problems with the home you're hoping to live in soon? If that happens, you have a couple of options.

1. Negotiate with your seller

It's standard practice for real estate contracts to have a home inspection contingency. This states that if an inspector unearths issues with the home you're under contract for and the seller doesn't address them, you, the buyer, can walk away without penalty. As such, if you still want to move forward with your home purchase, your best bet is to ask the seller to fix the issues in question before you complete the sale. There's a good chance your seller will comply, because if the issues are severe enough, they could be a deal-breaker for another buyer, too.

Now in some cases, a seller won't fix the issues but will instead offer to take money off of your purchase price so you can address those problems yourself. That's a reasonable approach, and one you may be comfortable with. But before you agree to a price reduction, get in touch with some contractors and gather estimates so you know what it will cost to remedy the problems. If your seller offers you $10,000 to address faulty electrical work but the actual cost of getting that home up to code is $15,000, you'll lose out.

2. Walk away

If your real estate contract has a home inspection contingency, and your seller refuses to do anything about the issues uncovered during your inspection, then you may need to walk away. While many sellers are willing to address big problems, in today's tight housing market, sellers have the upper hand. And yours may use the fact that there's such limited inventory as a reason not to budge.

If that's the case, you can back out of the sale and start fresh with another seller. Of course, you could technically buy the home anyway and eat the cost of those repairs yourself. But if paying for them is a stretch, you may be better off backing out from a financial perspective.

Having a home inspection reveal issues is a major letdown, especially if the home in question appeared to be in good shape. But don't stress just yet -- there's a good chance your seller will work with you so you're not left with hefty repair bills. And if that's not the case, you should have the option to walk away without suffering any financial losses.

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