The Home Inspection Debate
People are doing crazy things in this market to make their home offers to appeal to sellers. How far are you willing to go to make the best offer? Right now, people are doing just about anything...including waiving inspection. If I asked you to surrender your rights to anything, what would you say? In this current competitive market, buyers are constantly asking this million-dollar question:
Should I waive my right to a home inspection & why WOULD a buyer waive a home inspection?
With multiple offers and competing bids offering 5k-10k-20k+ over asking price, waiving the home inspections is often the most favored term that wins the house for many buyers.
Sellers (even though they may be getting above list price offers) appreciate the security of knowing that the buyer will not "knock them over the head" during inspections.
Basically, as-is offers with no inspection contingencies avoid the dreaded fear of receiving a laundry list of fixes, tic-tac repairs, or requests for enormous financial credits.
Sellers are commonly saying: "I'll take the offer that waives all inspection contingencies!" You can see why a seller would like that type of offer, right? Who wouldn't?
So what's the risk?
The risk of waiving a home inspection is simple. In straightforward terms, buyers may end up adopting a "money pit." Undiscovered and unseen costly home repairs and possible safety or structural issues can haunt a new homeowner for years to come.
This happens on a normal basis with homeownership but the chances of inheriting bigger issues increases if you aren’t providing your own due diligence.
Can you afford that? Do you want to supply that in terms of money AND time?
Before you waive your right to inspections, here are a few other alternatives you may want to consider that will protect you and your deposit money:
Waive the contingency but do the inspection for information purposes only, i.e. "as-is" with an inspection.
This still allows you the option to back away and collect your deposit money if the inspection is not satisfactory.
Do the inspection and keep the contingency but limit the dollar amount for any repair requests.
This sets a firm expectation and puts a limit on the amount you are willing to work with.
Do the inspection and keep the contingency but limit any repair requests to 1 major concern.
This sets the groundwork that you will do inspections for information purposes that are only concerned about the 1 thing (ex. roof, electric, structure, mold, etc.)
Waiving home inspection contingencies is definitely a risk for the average buyer. For some buyers, the risk is calculated, common and expected practice. I am speaking primarily about experienced investors. This group of buyers are accustomed to "as-is" or "waive all contingencies" type of deals because...
- The acquisition price is usually under market value which buffers the financial risk over time.
- The subject property is either simple land or a basic shell where inspections are a useless and futile process.
- Their repairs are bundled into full property improvements (AKA full gut renovations) and are typically factored into long-term goals for the investment property.
- They know what they are getting into and how to identify the cost for repairs/renovation including “red flags."
Realtors should never outright recommend this to their clients due to obvious risks. Yet, many average buyers are weighing their options and vying for the waive-all rights to inspections or something darn close to it.
Furthermore, let's not forget that sellers, all licensed agents, and brokers involved with a sale aren't without liability when a buyer decides to waive all inspections. Realtors and home experts across the country all concur that it's extremely important to inform consumers of all the risks attached to this decision.
After being informed, buyers that choose to waive inspections should assume full responsibility for any potential issues that pop up as a result of forfeiting their right to inspect. Do not be shocked if you see a liability and disclaimer waiver appear in your inbox for you to Docusign.
We'll all want to be held non-accountable should something go south post settlement, if your decision is to waive your inspection in order to seal the deal.
It's that serious! Ultimately, it is your decision to make. If you choose to waive your right to the home inspection contingencies or settle on a variation of altering that right, weigh your risks and consider some reasonable alternatives first. We say leave the as-is offers to the investors and moderate the risks you take when trying to be competitive in the current market. Go in fully aware and informed.
If you are looking for someone to help you buy a home and would benefit from leveraging all of the information possible to protect you and get your offer accepted, we at The Somers Team have all of the tools to get your offer accepted and deliver on our promise: Real Estate Happiness.
Philly real estate market is HOT right now. People are searching for homes in every neighborhood in the Philadelphia region. If you are considering selling, be sure to reach out to The Somers Team for a free home value report.