When purchasing a home, buyers typically include a home inspection contingency within their purchase agreement, allowing for a professional inspection of the property before finalizing the sale. If that inspection reveals problems—such as a leaky roof, faulty wiring, or foundation cracks—the buyer can request specific repairs or financial credits through a Home Inspection Repair Addendum. This addendum, signed by both parties, formally amends the original agreement to detail agreed-upon repairs or credits, providing clarity and protecting both buyer and seller.
For buyers, this document offers crucial protection to avoid unexpected, costly repairs after closing, ensuring safety and functionality. For sellers, agreeing to reasonable repairs or credits can preserve the sale, demonstrate good faith, and prevent losing other potential buyers over unresolved issues.
The process begins after the buyer’s offer is accepted with an inspection contingency. Once the inspection report highlights any issues, the buyer reviews it and identifies significant problems to address—typically focusing on safety, structural defects, major systems, and code violations. The Home Inspection Repair Addendum then lists these items for the seller to repair or credit.
Negotiations follow, where the seller can agree to all repairs, some repairs, offer credits, counteroffer, or refuse. Should no agreement be reached and the contingency allows, the buyer may cancel the purchase without penalty.
Typical repair requests include fixing safety hazards (like exposed wiring or faulty smoke detectors), structural defects (foundation or roof issues), major system repairs (HVAC, plumbing), and code violations. Cosmetic fixes are generally excluded unless they affect property value or safety.
Repair agreements vary:
- Seller-performed repairs mean the home is delivered ready to move in but involve managing contractors and potential delays.
- Seller-provided credit allows the buyer to handle repairs post-closing, offering control but requiring buyer effort.
- Price reductions lower the purchase price, impacting mortgage and appraisal considerations.
Effective negotiation means prioritizing major issues, being specific in requests, and leveraging expert estimates where possible. Buyers benefit from flexibility and agent expertise, while sellers should consider repair costs versus the risk of losing the sale.
Common pitfalls include requesting excessive minor repairs, skipping inspections (which risks costly surprises), and failing to document agreements in writing.
Home Inspection Repair Addenda do not directly affect mortgage approvals but can influence appraisals or lender requirements if major issues remain unresolved. For related topics, see our Home Inspection Contingency and Return of Earnest Money articles.
For authoritative guidance, visit the Consumer Financial Protection Bureau’s Home Inspection page.
