Inspections During Escrow in SF: What to Do With the Findings

If you kept an inspection contingency in San Francisco, you probably have between three and ten days, and the seller has already handed you their own reports. Your job is to verify what the disclosure package says, open what the seller's inspector did not, price what you find, and decide credit, repair or walk before the deadline.

A day-by-day plan

The California contract defaults to 17 days. Bay Area agents describe 7 to 10 as the negotiated norm, and in SF many accepted offers carry 3 to 5 days or none. The clock runs in calendar days from acceptance; on the C.A.R. form a deadline landing on a weekend or holiday rolls to the next business day.

On a three-day window: inspections day one, specialists day two, decision day three, which only works if your inspectors and specialists were lined up before you wrote the offer.

The general inspection

Go. Walk with the inspector and ask three questions in every room: what is this, how serious, what does fixing it involve. An SF inspector who knows pre-1950 construction will spend their time at the foundation, the garage ceiling, the rear stairs and decks, the roof, the electrical panel and wherever water has been.

Read the report as triage, not a verdict. Sort the items into safety and structure (foundation movement, active leaks, unsafe wiring, gas), big-ticket systems near end of life (roof, water heater, furnace, drainage), and the long tail of maintenance you will do over ten years. Only the first two categories are negotiation material.

Pest report: Section 1, Section 2 and clearance

A California wood-destroying pest report separates Section 1 (active infestation, infection or damage: termites, dry rot, fungus) from Section 2 (conditions likely to lead to it, with no damage yet). The Section 1 total is what everyone negotiates around, and in SF it is usually dry rot at decks, rear stairs, window sills and bathroom subfloors rather than termites.

The bid printed on the report is one contractor's number; repair bids for identical findings vary far more than inspection fees, so get a second bid on anything significant. A "Section 1 clearance" certifies the Section 1 work was completed; some government-backed loans want it, conventional lenders generally do not, and it is your proof the work was done if you negotiate a repair.

Sewer lateral scope

Much of SF still drains through original clay or cast-iron laterals. The SFPUC's rule: the lateral belongs to the owner, who is responsible for the upper section from the building to the curb; under most circumstances the SFPUC repairs or replaces the lower section from curb to main when it has a structural defect, usually at no cost to the owner, so confirm with the SFPUC before paying for street work. There is no sale-triggered inspection certificate in SF the way the East Bay has, so nobody checks this line unless you do.

Normal findings on a 100-year-old pipe: minor root intrusion, small offsets at joints, scale in cast iron. Findings that cost real money: a collapsed section, a belly holding standing water, roots filling the pipe, or a break under the sidewalk or street. Other Bay Area agencies have published older replacement estimates of roughly $4,000 to $11,000 (as of 2026-10-25, check current figures); SF bids for deep or long runs are often higher and into five figures, so get two bids rather than trusting any average.

Foundation, drainage and seismic findings

Escalate to a licensed structural engineer when the inspector flags a brick or unreinforced foundation, cripple walls taller than about four feet, a house on a steep slope, a soft-story ground floor, a retaining wall holding back a hillside, or settlement signs such as sloping floors and doors that will not latch. Pay for an engineer's flat-fee visit and letter rather than a contractor's free estimate; the contractor wants the job. The engineer tells you whether you are looking at a retrofit measured in thousands or a foundation replacement measured in six figures, and that difference is your whole negotiation. SF red flags covers what each of these conditions means.

Condo buyers: the HOA review runs in the same window

Under Civil Code 4525 the seller must deliver the governing documents, current budget, reserve funding summary, insurance information, minutes and any notices of assessment or litigation, and the association must produce them within 10 days of the request. The standard California contract gives you until the end of your contingency or five days after delivery, whichever is later; the SFAR contract has its own language, so check it.

Three things to do in parallel with the physical inspections:

• Read twelve months of minutes for the words leak, litigation, special assessment, reserve study and insurance.
• Get the master insurance policy declarations and the renewal date. Associations across California have faced non-renewals and premium jumps; a master policy that renews next month at double the premium lands in your dues.
• Ask your lender on day one to send the condo questionnaire to the management company, and ask the listing agent who at the HOA answers it. Lender bulletins describe a broader Fannie Mae full-review requirement for applications dated August 3, 2026 or later; confirm with your lender which review applies, because a slow questionnaire is a leading cause of late closings. HOA documents explains what the numbers should look like.

Request for repairs, credit or price reduction

You can ask for any of the three. What SF sellers typically accept, in rough order of likelihood:

1. A credit toward your closing costs for a genuine surprise the disclosures did not cover. This is the cleanest ask; nobody has to coordinate contractors before closing.
2. A price reduction when the credit you need exceeds the lender's cap on seller contributions: 3% of price with less than 10% down, 6% with 10% to 25% down, 9% above 25% down on a conventional loan, and never more than your actual closing costs.
3. Seller-performed repairs, which sellers resist because the work and the warranty become their problem. If you go this way, specify licensed contractors, permits where required, and a re-inspection before close.

Sellers usually refuse anything that was visible in their own reports: if the package's pest report said $18,000 of Section 1 and you offered anyway, asking for it back reads as a renegotiation, and a seller with a backup offer will decline. Before you ask, test the adjusted price against closed sales in the comps tool so you know whether the home is still fairly priced with the repair cost deducted, and read contingencies for how the removal mechanics work.

Remove, hold back, or walk

Remove the contingency in writing only when you have the answers you need and any agreed credit or repair is in a signed addendum. If a repair cannot be finished before closing, ask escrow for a holdback: a sum held from the seller's proceeds and released when the work is verified. If you are walking, cancel in writing before the deadline and request release of your deposit; a clean cancellation inside the contingency gets it back.

Keep everything: reports, photos, bids, the seller's responses; if an undisclosed problem surfaces after closing, that file shows what the seller knew.

What to shop for right now

Two medium-savings items. A general inspector, if you did not inspect pre-offer: fees cluster around $500 to $850 in the Bay Area, so the saving from shopping is a couple hundred dollars at most; what you are really shopping for is next-day availability and a report specific enough to negotiate from. Specialists: ask for a flat diagnostic fee from someone who does not want the repair job (a scope-only operator, an engineer rather than a foundation contractor), then collect two bids on anything you will negotiate over. The spread between repair bids is where the money is.