An inspection will cost you, depending on your area, anywhere from $250.00 on up... why spend that money on a property, when you haven't yet been able to determine if you and the seller can come to an agreement on how much you're going to pay for the property.
Once you've agreed on a price, you typically have an inspection period, and during that period you'll have an opportunity to raise any issues you've found during the inspection and see if you can resolve them. You could negotiate a repair, or a credit for major problems found, or determine that some of the minor problems were minor enough to ignore. You could also decide that the issues raised by the inspection were so serious that you no longer want to purchase the home. All of these options, and probably more, are open to you that point, so you haven't locked yourself into a deal, that you can't escape from.
The sellers always provide disclosures about the property and sometimes the sellers have already performed inspection on the house and may have even made repairs - make sure you request if the sellers have already done that and study it before you make an offer.
It is customary for buyers to do inspection after they have made offers. Same reason as the other pros - cost. Yous should always make an offer contingency upon inspection (and others) and an adequate inspection period so you can have time to perform needed inspections. They are pricey, and depends on the findings, you might want to obtain additional specialized inspections (such as roof, chimney, structure, etc)
Yes, you can negotiate credit for repairs or even have sellers repair the items found during the inspection period - another major negotiation your agent has to do for you (first is the negotiation of the original offer terms and conditions), a good agent will be able to negotiate decent and fair credit from the findings. Those, depending on the amount, can be credits towards closing costs.
However, some sellers will require you to purchase the property "AS IS" (there is a soft as is and a real as is) where they do not want to negotiate repairs or credit backs after you made an offer - especially true for bank owned property, major fixers and other reasons. But you always have the right to perform inspection and pull out if your assumption on the house condition is vastly different from the inspection result.
So, there is a lot to your question. Being a first time home buyer' it is highly recommended that you engage a quality realtor's service who will see you through all these.
When you make an offer, you make it predicated on what is known about the property. Example: The stove is older, but it works fine. You knew from looking at the property that the stove was older. But, if it doesn't work, you may ask the seller to repair it. An inspection report is not meant to be the catalyst for a new round of negotiations, but there are usually some details that need to worked out either via repair or credit.
The language of the contract will determine your rights and deadlines pertaining to inspections.
If you have you inspection after an offer is accepted the contract usually give you a time frame to have any and all inspections and the right to approve, disapprove and/or negotiate repairs. I notices you are in Santa Clara, your Realtor maybe using PRDS or CAR forms. I know the CAR forms provide an inspection contingency for the buyer. Hope this helps and good luck.
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