Hey y’all.
I often get a lot clients asking me to explain complicated real estate terms in easier ways for them to understand. Today, I will discuss one of the more important concepts in a real estate transaction: The Inspection Contingency Period. So gather around and grab your juice boxes as I am about to ELI5 (Explain it like you’re 5 Years Old) what a contingency period is in a real estate transaction.
What is an Inspection Contingency Period?
Alright, imagine you and your parents are buying a special toy from a store. But before you can take it home, you want to make sure everything is okay. So you and your parents decide to have an “inspection contingency period.”
During this time, you and your parents will check a few important things to make sure the toy is exactly what you want. For example, you might want to check if all the parts are there, if it’s working properly, and if there are any problems with it.
In a real estate transaction, it’s similar. The buyer and seller agree to have an “inspection contingency period” where the buyer can check the house to make sure it’s in good condition and meets all their requirements. The buyer might bring in a special person called a home inspector to look at the house and make sure everything is okay.
If the buyer finds any problems during the inspection contingency period, they can tell the seller and ask them to fix those problems before buying the house. If the seller can’t or won’t fix the problems, the buyer can choose to cancel the deal and get their deposit money back.
Just like you want to make sure the toy is perfect before taking it home, the buyer wants to make sure the house is perfect before buying it. The inspection contingency period helps the buyer feel safe and confident that they’re making the right decision.
Note that there are other types of contingency periods in a real estate transaction, besides the inspection period. The most notable being loan and appraisal contingency periods. Those will be covered in another post.
Thanks for reading,
Julian Yun, Broker CA DRE01783918
Los Angeles, CA
If you have any questions, feel free to email me at info@themodernflat.com.