Here's What Happens if There Are Problems With a Home Inspection

If you are buying a home, there are a few steps you'll have to take before you get the keys to your new place in your hand. You'll likely need to get approved for a mortgage loan so you can borrow the funds needed to make your purchase. And, you will typically also want to get a home inspection.

In fact, this is so important, you should make your offer contingent upon a satisfactory inspection. That would mean that your purchase was conditioned upon an inspector writing a report about the home's conditions so you could review it and determine whether you wanted to move forward.

But, the big question is, what happens if a home inspection turns up problems? If that occurs, here's what happens next.

You can negotiate with the sellers

If you have made your offer to buy the house contingent on an inspection, you have some leverage. Since you have the right to walk away, you can try to re-open negotiations with the home's current owners.

Typically, there are a few different options you could pursue when an inspector finds a problem.

Ask for a credit or price reduction

One option is to ask the sellers for a credit or a reduction in price. For example, say that the inspector found out that the home's roof was old and damaged and needed to be replaced. Since the average cost of a new roof is about $10,000, that's a big deal.

You could ask the seller to provide you with a credit, so you would keep the cost you pay the same and walk away with the $10,000 needed to make the repairs. Or you could ask the sellers to reduce the price of the house in this circumstance. If you were going to pay $450,000, for example, you could ask the seller to reduce the cost to $440,000 so you could then pay for the roof to be fixed.

A big benefit of asking for the price to be reduced or the seller to give you a credit is that you can then make the repairs yourself and arrange to do it with a repair person of your choosing. But, the downside is, if the seller simply lowers the home's price, you'd have to then come up with the $10,000 out of pocket to pay for the roof repairs after closing.

Ask for fixes to be made

You could also ask the sellers to actually make fixes based on what the inspector found. For example, you could ask that they repair or replace whatever the report said was wrong. This would simplify your life since you wouldn't have to do home improvement work upon moving in. But, there are downsides. You won't know if the repairs are done well, and the sellers have an incentive to try to do them as cheaply as possible. And, sometimes sellers also can't afford to pay out of pocket for big expenses before the home sells, so this could be another obstacle.

Still, if you definitely still want the house after an inspection shows problems, you'll most likely want to pursue one of these two approaches and see if the sellers are willing to work with you on either option.

You can walk away from the deal

Another option is to just walk away.

If you made the sale contingent on a satisfactory home inspection, you should get your deposit money back if you follow the contract requirements (which may include providing notice within a set time).

If you didn't make a contingent offer and you walk away, you could lose your deposit, which would be bad but perhaps not as bad as going through with getting a mortgage on a home that had major issues.

The key is, you will have these options only if you made your offer conditional. So be sure to do that so you will have a choice of how to proceed if a problem with the home inspection unexpectedly turns up.