Home Buying in Los Angeles>Question Details

Jm, Home Buyer in Los Angeles, CA

Hello, I am currently in escrow on a property and am uncertain about a few issues.

Asked by Jm, Los Angeles, CA Mon Mar 17, 2008

My agent is telling me that I can sign off on the physical inspection contingency and not be worried because I can still pull out later citing a physical issue with the house. This is because I will still have the loan contingency and appraisal contingency in place. This seems counter-intuitive to me because it seems that if a buyer signs off on the physical contingency, then they should not be able to later on complain about a physical aspect of the house. It would seem to me that once the physical contingency is signed then the reason cited for pulling out by the buyer must be loan or appraisal related. Is this true?
Also, my agent wants me to sign off on the physical contingency without having reached a firm agreement with the seller on what repairs are to be done. Is this good advice? It seems to me that if a buyer does this, the buyer loses negotiating power in terms of the repairs to be done. Please help!

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Yes Jim you are correct. Typically the buyer has 17 days from acceptance of the purchase agreement to complete all of his physical inspections and financing contingencies. The seller has no obligation to make any repairs or corrections to the home or even respond to items you want addressed per your physical inspection report. However, the buyer has every right to provide the seller with a list of concerns, questions and corrections within their 17 day physical inspection time frame. Unless the seller or seller's agent presents you with a notice to buyer to perform, hence invoking constructive notice that the contingency period has expired you can continue to ask the seller to make any corrections to the home and the loan continency period may remain open.

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.
1 vote Thank Flag Link Mon Mar 17, 2008
Hey JM,

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.

Best,

Monique
1 vote Thank Flag Link Mon Mar 17, 2008
Hi, S:

"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!
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Wed Mar 19, 2008
We too are in escrow and just finished signing off the contingencies. I am glad we waited until the end on each one as the inspection one came in handy - seller only offered a small credit instead of fixing items but we went with it in return for him giving up something that was overlooked in the orginal offer negotiation. Some may say this doesn't sound fair but you do what you have to do. Had he agreed to fix what was on our list (and it was reasonable) we would have of course proceeded but as a buyer sometimes you need all the leverage you can get. 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. Use all of them to your advantage.
0 votes Thank Flag Link Tue Mar 18, 2008
Don't release contingencies unless you are absolutely sure that you are comfortable with the condition. If you're not then you can have your agent complete a Request for Repair form. Once sellers have signed that and fixed the problem, then you release the contingency. Good luck.
0 votes Thank Flag Link Mon Mar 17, 2008
Jim, I would not advise my clients to release a physical contingency until an agreement has been reached. Each contingency is set up for a different reason, therefore to pull-out would need to line up with whatever contingency remains.
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Mon Mar 17, 2008
Jm,

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.

Good luck,
CJ
0 votes Thank Flag Link Mon Mar 17, 2008
No you should not remove your physical inspection contingency until you have completed all of your investigations of the property and are satisfied as to the condition. I'm not sure why she is asking you to do this unless she is trying to give the impression to the seller that you are so infatuated with the property you are willing to take it without any request for repairs etc. You could do what she says and back out due to your inability to obtain your loan but you would lose honor, respect and have your ethics questioned. If you remove your physical contingency the seller would be under no obligation to make a later request. Unless this is a hot property and there are multiple offers there is no reason that I can think of to remove the physical inspection contingency prematurely.
0 votes Thank Flag Link Mon Mar 17, 2008
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