Protect Yourself From a Lousy Deal

Home buyers venturing into the market this year may be surprised to discover something strange and unfamiliar: their backbones. As outrageously strong sellers' markets slow in many parts of the country, the balance of power between buyers and sellers is shifting back toward a more normal equilibrium. So it's time to become reacquainted with the classic contingencies that stand between you and a rotten result -- contingencies that home buyers had to abandon in white-hot sellers' markets.

If there's evidence that the housing market you're shopping in is cooling off, be sure to add some or all of these clauses to your offer. They were staples of the home shopper's protective armor before prices went crazy, and we sense that markets are finally returning to normal.

Home inspection. This contingency means the house must pass muster from an inspector you hire. Specify how many days will be allowed for you to get the inspection report. During peak sales season (generally the spring), inspectors can get booked up, so be sure you can get one within your time frame.

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You must also make sure the contract spells out what will happen if the inspector finds flaws. If something significant turns up that affects the livability or value of the home, such as a foundation problem, you have the option of continuing negotiations with the sellers. You may want the sellers to make the repairs or to credit you so you can have the repairs done yourself.

Extra inspections. Your home inspector may find some conditions that warrant further investigation. For example, wall cracks or sagging floors might require another inspection by a licensed structural engineer. Or suspicious-looking insulation could warrant an inspection for asbestos. These additional examinations should be permitted by your home-inspection contingency.

Lead-based paint. If the house was built before 1978, it may contain lead-based paint. Federal law requires sellers to allow buyers up to ten days to get an inspection for the presence of lead. Buyers and sellers may agree (in writing) on a different period for inspection, or buyers can waive the requirement altogether. For more information, call the National Lead Information Center at 800-424-5323. You can also see the U.S. Environmental Protection Agency's regulations and recommendations at www.epa.gov.

Homeowners insurance. If you're in an area with a troubled homeowners-insurance market (think wildfires and mudslides) and it's not a slam-dunk certainty that you'll be able to get an affordable policy, you could include a contingency that says the deal hinges on your getting coverage.

Home-sale contingency. Sellers don't like to see this one in your purchase offer. But if they're having trouble finding a buyer, they may agree to a contingency that says the deal isn't firm until you have found someone willing to buy the home you are leaving. You can make this contingency more palatable to the sellers by including a "kick-out" clause, which allows them to continue to market their home while you search for a buyer.

-- Elizabeth Razzi

This article is excerpted from The Fearless Home Buyer: Razzi's Rules for Staying in Control of the Deal (Stewart, Tabori & Chang, $17; available January 15).