Your house has been for sale now going on 60 days along with many other houses here in Pasadena and you just accepted an offer. Congratulations, time to start packing all those personal items, right?
You might wait a few days before making that trip to the box store and here's why. When a Seller places a home on the market "For Sale", they are 100% committed to sell it (most of the time, I have seen some exceptions). When a Buyer has a purchase contract accepted they are usually 50% committed to buy it. Notice a disparity here?
Our purchase agreement drafted by the California Association of Realtors provides for a seventeen day contingency period. Contingencies are provided to the Buyer for a number of issues including obtaining a loan, appraisal of the property, investigation of the condition along with insurability, other reports and disclosures made by the Seller or ordered from a third party, the preliminary Title Report, common interest or HOA documents and maybe even the sale of the Buyers property. This is the time in which a Buyer has to perform their due diligence. Home Buyers should be using this time effectively by obtaining as much information as they can about the property and its condition. If they plan to make repairs or changes, now is also a good time to be obtaining quotes from contractors.
When I mention this to FSBO's they look at me and say "Huh"? A purchase agreement is a complex document involving hundreds of thousands of dollars, and unless you do it everyday you just don't know what you don't know.
During this seventeen day period, most Buyers will pay for a Professional Home Inspection, we strongly recommend it and most agents I know highly encourage it. These usually cost in the neighborhood of $250 to $500 depending on the size of the property and the scope of the inspection. This is analogous to going to your family doctor for a check up. If they feel anything warrants further investigation, they will refer you to a specialist. A Home Inspector will refer you to a plumber, electrician, soils engineer, fireplace specialist, etc., if they feel some area of the house warrants further investigation.
It's been a short or long seventeen days depending on your outlook and now its time for the Buyers to make their decision. Do they go forward with the purchase or have they discovered something in their inspection process that may make them change their mind? After all, that word contingency means 50/50, maybe they will, maybe they won't, who knows?
In the next installment of this story, we will take a look at how this ongoing saga can come to a conclusion. We will also look at ways a Seller can reduce this contingency period and their resulting anxiety.
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