Inspection Addendum: “Buyer Shall Cap Any Inspection Requests at $500”
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
How do Buyers competing in multiple offers differentiate their offers?
By offering the most money, strongest financing, and most desirable (at least to the Seller) closing date.
So, how else can Buyers make their offer stand out?
By contractually limiting their post-inspection requests.
Illusory Protection
In theory, a Seller who enters into a Purchase Agreement that includes such a clause is protected from any Buyer fishing expeditions, right?
Sort of.
But, fishing expeditions are never in-bounds during the inspection phase of a deal, and a Buyer who, unbidden, promises to forego one is more likely to unsettle than reassure the Seller.
See also, “The Difference Between a Home Inspection Addendum and a Repair List.”
Non-Concession
Now, consider what will happen if instead the inspection uncovers any previously unknown, material issues.
In such a case, it’s highly unlikely that the Buyer is going to stay in the deal without a commensurate price reduction.
A Seller who stands fast, invoking the cap on inspection issues, is likely to receive a Cancellation instead — and will have to update their Disclosure to tell all future Buyers about the newly-discovered issue(s).
Which leads to my take on such clauses: they ultimately don’t offer Sellers much protection, so don’t rely on them.
Or, in the case of multiple offers, don’t select a winning bidder based on such a (non)concession . . .
