Inspection Contingency Mistakes Agents Make (That Cost Clients Thousands)

The inspection contingency exists for one reason: to give the buyer an out if the property has problems they didn't know about. It's the most-used contingency in residential real estate, and it's the one most often handled incorrectly. When it's done right, it protects your client. When it's done wrong, it either gives away their negotiating power or leaves them trapped in a deal they should be able to exit.

This is the most common and most costly inspection mistake. The contract gives the buyer 10 days for the inspection contingency. The inspection happens on day 5. The report comes back on day 6. The buyer's agent reads it on day 8 and starts drafting an objection. But the objection doesn't get sent until day 11 — one day after the deadline. The contingency has expired. The buyer has lost their right to object.

In many contracts, an expired inspection contingency is automatically waived. The buyer is now locked in — potentially forfeiting their earnest money — regardless of what the inspection found. Some contracts require the buyer to affirmatively waive the contingency, but others treat silence as acceptance. Know which type your contract uses.

"Buyer objects to the condition of the roof." That's not an objection — it's a complaint. A proper inspection objection specifies exactly what the issue is, references the inspection report, and states what the buyer is requesting (repair, credit, or termination). Without specifics, the seller can reject the objection as too vague, and some contracts allow the seller to terminate if the parties can't agree on repairs within a specified window.

Write objections that a contractor could act on: "Inspector identified 15 missing/damaged shingles on the south-facing roof slope (Report p. 12, photos 23-25). Buyer requests seller repair or replace damaged shingles prior to closing by a licensed roofing contractor, with proof of completion provided to buyer's agent at least 5 days before closing."

Many buyers — and some agents — think "as-is" means the buyer can't have an inspection. That's wrong. "As-is" typically means the seller isn't obligated to make repairs. The buyer can still inspect, and in most as-is contracts, the buyer can still terminate based on the inspection results within the contingency period. They just can't demand repairs.

The distinction matters. An as-is clause protects the seller from repair requests. An inspection contingency protects the buyer's right to exit. They're different mechanisms that can coexist in the same contract. If your buyer signed an as-is contract without an inspection contingency, they've given up both protections — and that's a very different risk profile. This is one of many red flags that AI contract analysis can catch instantly.

In hot markets, buyers feel pressure to waive the inspection contingency to make their offer more competitive. Some agents encourage this. It's one of the riskiest things you can do for a client. A $500 inspection that reveals a $40,000 foundation problem is the best money your client will ever spend.

If your client insists on being competitive, there are alternatives to a full waiver: a shortened inspection period (5 days instead of 10), an inspection for informational purposes only (buyer can exit but can't request repairs), or a pre-inspection before submitting the offer. Any of these is better than flying blind.

The seller agreed to fix the electrical panel. The buyer's agent asks for proof at closing and gets a handwritten receipt from the seller's "handyman friend." Or worse — gets nothing, assumes it was done, and the buyer discovers on move-in day that the electrical panel is exactly the same.

If the contract requires repairs, the contract should also specify how completion is verified: licensed contractor receipts, a re-inspection by the original inspector, photos of the completed work. Build the verification requirement into the repair addendum — not as an afterthought, but as a contract term.