When buyers and sellers and their agents are using MLS forms for their contract there is a regular addendum used for inspections called the Form 35. This addendum typically outlines the procedures and timelines for the buyer to perform inspections on a property that they’ve chosen to purchase. If default timelines are used the initial inspection period can go up to 10 days but since there is a blank space in the document it is possible to alter this period to any timeline that the parties will agree to.
There is also a segment of the addendum that makes an allowance, as long as proper notice is given from buyer to seller, for the inspection period to be extended if the initial inspection finds that an item (or more) needs further evaluation by the buyer. The default period for this timeline is 5 days. Then there are elements that dictate the timing of responses back and forth regarding the inspection requests, if any, between the two parties which is a default of 3 days apiece.
In the “go-go years” of the past half decade (2002-2007) where we experienced quick growth and appreciation on homes, and there were lots of buyers competing for properties, we saw buyers either waiving inspections (I don’t recommend this unless you’ve done a pre-inspection), doing pre-inspections, or making the inspection period very short (anywhere from 1 to 5 days). We aren’t seeing much of this anymore although a few listings I’ve been watching did go directly to PENDING status so the buyer either did a pre-inspection and waived it, or they just decided to forego one – again, I personally don’t recommend it. And, if a client ever did want to do so I would have them sign a big fat waiver stating that I was against it and they chose to do it anyway. Unless you’re a professional contractor or other building professional (such as an architect or structural engineer), it’s not a wise idea.
I’ve been watching several different houses posted on the MLS closely to track what is occurring in the marketplace in various areas where our clients have interest in buying or selling. One thing I’ve noticed is that timelines between when an offer is accepted and the STI (subject to inspection) status is changed to PENDING is taking longer and longer. Here are some examples:
One $350k-ish single story Renton house went through 5 weeks of inspection period before going pending in mid-February and it’s still not closed. A mighty long closing period if you ask me (STI on 1/14, pending 2/19, and not yet closed).
A $600k range Tudor style home in Maple Leaf/Ravenna that went STI on 3/16 and still hasn’t gone to pending.
A newer $800+k home in Sammamish that went STI on 3/15 and still hasn’t gone to pending.
On a quick search of area 705 (Ballard/Greenlake), for homes priced between $500-700k, there were 2 out of 12 homes in STI status that were well outside of a 10 day inspection period range.
For buyers, this is good news in general because it may mean that you’ve got a lot more time to figure out if the house you’ve got under contract is really in the condition you expect it to be before finalizing a purchase. For sellers, this may not be bad for you, really, because it can mean you’ll have less likelihood of liability issues after the sale. How so? Because a buyer will have had more time during an inspection period, or an actual inspection versus the waiving craze we had earlier, before purchasing. So, if legal issues hit after the sale you can point to the fact that the buyer had ample opportunity to find problems prior to closing. Granted, I’m not an attorney or legal expert, so I’m not making a blanket statement that you’re covered, especially if you’ve “hidden” a defect from a buyer. But it’s a step in the right direction and with the newer forms from Fall 2007 putting more emphasis on who’s responsible for liability of issues found after the sale, it’s good to have an inspection from a seller’s point of view.
Either way, it’s a good sign of a market place that has balanced back out and is no longer a seller’s market. I’m still not 100% of the mind that it’s a buyer’s market in the Seattle area as some people (mostly the buying public and the media) want to believe, but things certainly have balanced out so that common sense can rule more regularly than buying hysteria. I like the renewed balance also because it really does let agents, like me, that like the negotiating part of our job to really get involved to work out issues between parties and to get more cerebral in how we approach a transaction and the needs/issues that come up throughout the process and which need to be addressed.
Happy negotiating!
