After the 17 day contingency period has expired the seller has the right to provide you with a notice to perform asking you to accept the property in its currect condition or with the understanding that certain items shall be corrected prior to close of escrow. At that point, you will need to make up your mind if you wish to continue with the purchase or back out based on any unacceptable inspection items the seller refuses to address.
You should sign off on each contingency outlined in your purchase agreement at the end of each time period for that specific contingency or simply back out of the transaction all together if you are unsure about the home. Don't waste any more of the seller's time and help ensure the return of your good faith deposit held in escrow.
Wow. It sounds like your agent may be trying to push you through this deal. If issues came up on the physical inspection and you are still negotiating what the seller will or won't credit you I don't think it would be wise to remove your inspection contingency. You will lose your leverage! agent is right you could back out later on the loan or appraisel but why bother with removing the inspection contgency if you aren't satisfied with the results of that inspection. You may ask your agent to request an extension on the contingency so that you have more time to figure out what is going to be done or not.
"Bottom line is that brokers want these removed asap so that they can move closer to their commission and not have the deal fall through."
If you go back and re-read your contract you will see that there are deadlines set up to help the CONSUMER be able to complete the transaction. I always try to be right on top of all these deadlines whether I am representing the Seller or the Buyer to protect their interests - my commission comes way down at the bottom of the list - my job and my code of ethics - requires me to put my responsibility to represent my client's interests and not my own!
Really, I am always amazed at how jaded people are about Realtors/Agents/Brokers...I would say that the percentage of shady participants that I have run into are very few and far between! We are here to help YOU!
It is always difficult to advise on a situation that is summarized in a paragraph. I believe you posted previously in regards to termite damage. Based on the information you have provided, I would be very hesitant to release the physical contingency without having the issues resolved with the seller. However, all contingencies have a time limit and getting it resolved within that time limit is absolutely essential unless both parties can agree to extending the discussion via an amendment to the original time limits.
Review your contract carefully in regards to repairs (most items that are inoperable are to be repaired by seller before COE, etc...) and specifically to the point of termites. Review these with your agent and make sure they are fully aware of your concerns. I agree with you that releasing the contingency would not appear to be the most prudent thing to do based on the circumstances you have indicated.
If you truly want the home, try to find the best way to work this out with the seller. As with all negotiations, the situation is best if it is a win-win for all. In a buyer's market, the seller should have some flexibility and be responsive to reasonable request for repairs. The seller's agent should be supporting the benefit of having an offer as long as it is a reasonable offer and request for the home.