What is the Inspection Period when buying a house?
The Inspection Period is the time between when your offer to buy is accepted, until you remove your conditions and sign the final contract to buy the property. The amount of time can be anywhere from 5-14 days. During this time you have the option to back out of buying the house. You will get a Home Inspection done by a professional, to identify any problems with the house and negotiate your final price. During this time you can also show the house to potential wholesale partners. By the end of the Inspection Period, you must have financing in place, that is you must be cleared for what ever type of financing you are using to buy the property, be it a traditional mortgage, a hard money loan, investors funds or your own cash.
At the end of the Inspection Period you will sign a final copy of the contract to buy, removing conditions and settling on a final price. You then have a period of time before closing, what ever you have negotiated depending on financing and other circumstances.
Continuing the story of our first deal, we had a 7-day Inspection Period. Our original plan for the property was to wholesale it. We set up a date to get into the property when we had our Home Inspector, contractors, interested investors and a bank appraiser come. Everything happened on that one day. It was a bit of a zoo! The reason we had all the investors come at once was to create urgency. The house was a great deal, and they all knew it. We found one main problem area in the Home Inspection, but basically the house just needed updating. We gave all the investors instructions to contact us within 3 business days with their offers, and we would go from there. The day of the inspection we had an investor let us know that they were very interested in buying the house with us as a joint venture. In the end, this was the offer we accepted and thus began our first investment property experience! Immediately after this investor contacted us, they began getting financing in order and on 'condition day' we signed the final contract with them.
After Condition Day, we had 7 days before closing. We used this time to line up our contractors of choice to begin work as soon as we had possession of the property.