Navigating the Inspection Period and BINSR in Phoenix Real Estate
In a Metro Phoenix residential real estate transaction, the Inspection Period is a critical, buyer-centric phase where the property’s true condition is evaluated. It is formally navigated using the Buyer’s Inspection Notice and Seller’s Response (BINSR) document, which often becomes the contract’s second major negotiation.
The Inspection Period: The Buyer’s Due Diligence Window
The Inspection Period is a timeframe, typically 10 days from contract acceptance, granted to the buyer to conduct any and all inspections they deem necessary. This is the buyer’s opportunity to perform their “due diligence” and discover issues with the property that were not apparent during a showing.
Common inspections include:
- General Home Inspection: A top-to-bottom review of the home’s major systems (HVAC, plumbing, electrical) and structural components.
- Termite Inspection (WDIIR): Checks for wood-destroying insects like termites.
- Pool Inspection: Examines the pool/spa equipment, plaster, and decking.
- Roof Inspection: A specialized look at the condition of the roof.
- Sewer Scope: A camera is sent down the main sewer line to check for blockages, breaks, or root intrusion.
At the end of this period, the buyer has three fundamental choices:
- Accept the Property: If the inspections reveal no significant issues, the buyer can accept the property in its “as-is” condition and move forward.
- Cancel the Contract: If the buyer discovers issues they are unwilling to accept, they can cancel the contract within the 10-day period and receive a full refund of their earnest money.
- Request Repairs: The buyer can ask the seller to make repairs by submitting the BINSR document.
The BINSR: A Formal Negotiation Tool
The BINSR is the official AAR (Arizona Association of Realtors) form used to facilitate repair negotiations. It is not a casual request; it’s a formal addendum to the purchase contract.
Here’s how the process unfolds:
- Buyer Submits the BINSR: The buyer lists the specific repairs they want the seller to address. They must choose one of two options:
- Premises Accepted: This is used when the buyer is satisfied and not requesting any corrections.
- Premises Rejected: This is chosen when the buyer disapproves of items and requests the seller to respond. The buyer will attach relevant pages from the inspection report to justify their requests. They can request repairs, a credit at closing, or a price reduction.
- Seller’s Response: The seller has a limited time (typically 5 days) to respond in one of three ways:
- Agree to all of the buyer’s requests. The inspection period is concluded, and both parties move toward closing.
- Refuse to make any repairs or corrections.
- Provide a modified response. The seller might agree to some items but not others, or offer a monetary credit in lieu of repairs.
- Buyer’s Final Decision: If the seller does not agree to all of the buyer’s original requests, the ball is back in the buyer’s court. The buyer has 5 days to either accept the seller’s response and proceed with the contract or cancel the contract and have their earnest money returned. The buyer has the final say.
Handling Major Repairs and Paying After Closing
A common and powerful but often misunderstood strategy is addressing major, costly repairs. Many sellers incorrectly believe they must have the cash on hand to pay for a new roof, driveway, or HVAC unit before the sale can close. This is not true.
The process for paying for major repairs from seller proceeds at closing is straightforward:
- Negotiation: The buyer requests the major repair (e.g., “Seller to replace roof prior to close of escrow”) on the BINSR.
- Agreement: The seller agrees to the request in their response.
- Contractor Quote: The seller (or their agent) obtains a formal quote from a licensed and bonded contractor for the agreed-upon work.
- Submission to Escrow: The contractor’s invoice is submitted to the title/escrow company.
- Payment at Closing: At the close of escrow, the title company pays the contractor directly from the seller’s proceeds, as detailed on the settlement statement. The seller never has to pay out-of-pocket.
This method ensures the work is funded and completed without requiring the seller to have liquid cash upfront. In some cases, if the work cannot be completed before closing (e.g., weather delays for a roof), funds from the seller’s proceeds can be held in a separate escrow account to pay the contractor upon completion after the buyer has taken ownership.
Keeping Perspective: Don’t Sweat the Small Stuff
It is often strategically foolish for a seller to let a deal collapse over minor repair requests. Real estate agents frequently see sellers become defensive and refuse to fix a handful of small items that may only cost $1,500 to remedy.
Consider the financial context:
- During the initial offer negotiation, prices can swing by $10,000, $20,000, or more in a matter of minutes. A seller might accept an offer that is $15,000 below their list price without much hesitation.
- Later, during the inspection period, that same seller might refuse to fix a faulty garbage disposal, a leaky faucet, and a few broken roof tiles totaling a mere $2,000.
Losing a qualified, ready-to-close buyer over a few thousand dollars forces the seller to put the home back on the market. This can result in significant costs, including additional mortgage payments, taxes, insurance, and the risk that the next offer may be lower or from a less-qualified buyer. A good agent will advise their client to view minor repair costs as a small, final “cost of sale” to successfully close the deal they already negotiated.
