Over the years, home values have soared. Homes that used to cost $100,000 now cost well over $1,000,000. Buyers have become very savvy. In the meantime, these homes are becoming older and older with more physical issues needing attention. Physical inspections are a very important part of the buying process. As a seller, you need to be prepared for the physical inspection contingency. Although we often favor selling a home "as is," these words carry no meaning. If you are intending to sell as is, you must provide enough information so that the buyer is confident signing a full contingency waiver. The as is clause does not become binding until all contingencies have either been mutually negotiated or removed.

In a general physical inspection, one surprise can be the inspector's notations for additional inspections needed. Don't be surprised if the inspector suggests further inspections by a roofer, a sewer inspector, an environmental specialist or a termite company. Imagine this: A physical inspection company charges an average of $700 for an inspection. If they do not cover themselves by suggesting further inspections, the buyer might sue them for 10 times as much for being negligent. So, it's necessary for an inspector to suggest further inspections when they see areas that might need it.

Just because a buyer makes a request for needed items does not mean a seller has to make these repairs or offer a credit. The first thing to determine is, how motivated are you as a seller? Are you willing to cave in and give the buyer a credit or make these repairs? Or do you want to stand your ground and say these items remain as is? Some buyers may walk from the transaction unless they receive an adequate credit. Just know how firm you wish to stay, knowing this could happen.

A buyer, on the other hand, needs to be aware that not everything in the inspection report is the responsibility of the seller. The first thing I would suggest is itemizing requested repairs once you have the information. Determine if it is something that might be a fire hazard, significant health hazard, code violation or something that requires immediate attention for the well-being of the property. These are priority issues that need to be resolved regardless of who pays. Beyond that, things become grayer and more negotiable, particularly if they can be thought of as an upgrade or a cosmetic repair. Perhaps some noted items are just reaching their life expectancy but are still operative for now. These can be negotiated many ways, and each case is different.

Bottom line? Be prepared and understand that an inspection company is going to make additional recommendations. The buyer can decide for themselves whether to do these further inspections. They should not expect to be reimbursed for these inspections or the repairs suggested. On the other hand, the seller should not have expectations that the property is sold until the buyer has agreed to waive the inspections and purchase as is or until there is a mutual agreement by buyer and seller after removing the contingency.

For more information, please call Ron Wynn at 310-963-9944, or email him at Ron@RonWynn.com. To find out more about Ron and read his past columns, please visit the Creators Syndicate webpage at www.creators.com.

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