What is a “Right to Void Only” Home Inspection?
When buying a home, there are about four typical contingencies written into offers to protect buyers in the Northern Virginia market:
- Financing Contingency
- Appraisal Contingency
- Home Inspection Contingency
- Radon Inspection Contingency
In the intense seller’s market that the Northern Virginia suburbs are experiencing, multiple offers have lead to buyers having to rethink how many contingencies they actually need when writing an offer. A contingency is an option for the buyer to void a contract and get their earnest money back. The home inspection contingency is what we will focus on in this post.
The Residential Sales Contract, written by the Northern Virginia Association of REALTORS® (NVAR) and widely accepted as the go-to contract in even our farthest reaching suburbs, has two options for buyers wishing to have a home inspection contingency. They are:
- Home Inspection with Option to Negotiate Repairs or Void or
- Home Inspection with Option to Void Only
Reading those two options, the difference seems apparent. In the first option, you have the right to ask the seller for repairs. Doesn’t mean the seller will say yes to your repair requests, but you have the contractual right to ask. There is zero obligation for a seller to do anything based on your repair request. In fact, if everything was left as boiler plate in the NVAR Residential Sales Contract, the only thing a seller would have to fix would be any HOA violations noted on their resale inspection and making sure their smoke detectors were in working order.
When a buyer chooses the second option, they are letting the seller know in advance that they have no intention of nickel-and-diming then over piddly repairs. Having the option to void protects a buyer from having to move forward with the purchase of home with an overwhelming amount of repairs that they feel need to be done. This is an option that I see getting used a lot more often when there are multiple offer situations.
While that second option seems like a good compromise for buyers in a seller’s market, believe it or not, things are getting so competitive that I’m beginning to see buyers making offers without even having a home inspection!
The inevitable question comes up, “What if I have a home inspection with the right to void only and there are items that come up that, if fixed by the seller, I would still buy the house?” That scenario just happened to a buyer of mine. There was discovery of a potential water issue in the basement and improper support of a deck. Because my buyer was ready to void the contract over them, I made a friendly call to the listing agent in advance of sending our Notice to Void and the inspection report itself. Once a seller knows of latent defects with their home, they are obligated to disclose them. The listing agent knew that and agreed to extend our right to void period to allow the seller time to investigate the cost of fixing those items. Within a week, there was an agreement to pay a contractor from seller funds at closing to address the problems and our deal continued to move forward to settlement.
Asking for repairs in a right to void only inspections is not something that usually works out because of other issues, however, like the age of systems. Say the roof is original on a fifteen or twenty year old home and likely to need replacing in the next five years. That doesn’t mean there is anything wrong with it. And there are plenty of buyers who will gladly take on older roofs, HVAC systems and so forth just to get under contract. In situations with aging components, you can ask a seller to fix them, but you are likely to be told no and forced to move forward or void.
One day our market will normalize and home inspection contingencies with the right to ask for repairs will become the norm again. For now, any buyer in a multiple offer situation should consider making their offer stronger by going with a right to void only home inspection.