Disclaimer: Besides yourself, the party that has the most invested in your purchase is, of course, your lender. References below are based on the normal course of business for a real estate broker and do not include the dictates of the lender. Many lenders ask for a copy of the disclosure but, to date, most don’t ask for the home inspection. A North Carolina purchase contract provides for a due diligence period for the buyer. I’ve outlined what the due diligence period is in previous blogs but here is a brief recap: The buyer can walk away for any reason or no reason at all during the due diligence period. This time period is negotiable between the buyer and the seller and is a limited number of days. Within this agreed-upon timeframe, the buyer should get all inspections complete, negotiate for any repairs or concessions from the seller, obtain financing, and investigate everything related to the home and community. 

Let’s discuss the inspection process. Unless dictated by the lender, there is not generally a “passed inspection” controlling clause. Because you can walk away for any reason or no reason at all, your requests are based on negotiation of either repairs or financial concessions from the seller. Certain types of loans have certain requirements, (which you’d need to address with your lender), but in general, the buyer decides what is non-negotiable. 

Let’s say the inspection reveals multiple electrical deficiencies and the inspector concludes a particular electrical system has failed his tests. This provides more information for you, the buyer, but it doesn’t control the process beyond what you wish. You may ask the seller, via your agent, to have a licensed electrician make all electrical repairs and for work to be completed prior to closing. The seller may agree to this. At the end of the repair process, (but before the expiration of due diligence), the seller will provide an invoice completed by the electrician confirming the repairs made. On the other hand, the seller may not be agreeable. He may not believe it’s necessary or he may be unwilling to make the repairs even if he doesn’t disagree with the inspector’s findings. Hopefully, the seller’s agent will persuade the seller to employ a reputable, licensed electrician to make the repairs. Now that the electrical issues have been discovered, the agent has a disclosure issue, and the problems aren’t going away. If the seller won’t concede, the decision of going forward or not is entirely up to the buyer based on his own review of information. The buyer may consult with an electrician, get an estimate for repairs, and receive advice based on the findings. Ultimately, the buyer decides based on the professional advice he has obtained. There is no outside governance requiring a “pass” or “fail” review. 

These conversations bring up a couple of important items: seller market vs buyer market, disclosure, and lender input for needed repairs. All are discussions which we will address on another day. However, using the electrical scenario as a reference, my advice to a buyer would be to not move forward without consulting with a professional and acquiring a more specialized inspection. My advice to a seller would be to make the specified repairs as the agent for the seller now has a disclosure obligation (again, this is an important conversation for another day). After consulting with a professional, (in this case, a licensed electrician), the buyer must decide if the purchase is worth it considering everything gleaned during the due diligence period, such as the cost of repairs, the purchase price, and the overall good feeling the buyer has based on thorough research of the property.