What are the pros and cons of waiving a residential home inspection?
Saying that the real estate market is on fire right now would be an understatement. It is a sellers market and that means It is good news for the seller. Houses are placed on the market and those listings are receiving multiple cash offers within days of listing. From the buyer’s perspective, the news is not so good. You are competing with several other buyers for any home you are interested in.
In many cases, you have been house hunting for months and you may find one that you do not want to let get away. Greenwich Home Inspections does not advocate waiving the home inspection as there are workaround alternatives, such as having us accompany you on property showings. Waiving the inspection will expedite the buying process and potentially make you stand out from the competition. Just keep in mind that this strategy has two sides. You could end up with winning the home, but it could also end up costing you substantial expense down the road!
A home is probably one of, if not the biggest and most important investment you’ll make in your lifetime. As such, it’s absolutely crucial to your sanity and your bank account that you do your due diligence and have all of the facts and figures in place before you commit and sign a purchase agreement. Why? Simply put, instead of acquiring your dream home, you could be investing in a money pit.
Of course, some homeowners are ok with taking the risk to get the house they want. In this post, we will take a closer look at what a home inspection is and offer the pros and cons of waiving a home inspection.
What is a Home Inspection?
Typically, once you’ve signed a purchase agreement and the home is under contract, you bring in professional, certified home inspectors to perform a visual, in-person inspection.
This process is done to protect the buyer from any hidden problems. The inspector will walk through the home, inside and outside, and check its condition, the issue a report outlining what they have found. Inspection reports typically include any roof and termite damage, as well as structural issues and systems checks, including electrical, plumbing, and HVAC. In addition, the inspector will also document the home’s general interior and exterior features and condition, appliances, sprinkler system, pool, windows, doors, etc.
When the inspection is complete, the inspector sends his findings to the buyer. The buyer uses this information to first decide how to proceed. Depending on the information in the report, the buyer may use it as a negotiating tool to request that the seller pays for certain repairs before closing or reduce the sale price. If the damage is extensive, it provides a legal way to back out of the deal offer. For this reason, sellers want the inspection to go as smoothly as possible. If they want to sell quickly, they are often willing to negotiate to make it happen.
Why Buyers Are Willing to Waive the Home Inspection?
Right now, the New England real estate market is the hottest it’s been in many years. According to various online 2021 Home Buyer Reports, nationally, an estimated 28 million Americans are planning on buying a home in the coming year. At the end of 2020, the supply of homes available in the US was just 1.04 million units. According to the National Association of Realtors, this is the lowest number of available units since data collection began in 1982! This data supports the fact that we are in the midst of a sellers market.
With multiple buyers vying for properties and bidding wars becoming the norm, waiving the home inspection can become a compelling offer for a seller. The National Association of Home Builders Housing Trend Report found that being outbid was the most common reason buyers cited for not yet purchasing a home. So, it makes sense that an eager buyer would be willing to waive the home inspection contingency. Keep in mind that the risk of waiving an inspection may outweigh the benefits in the bidding process.
The Risks of Waiving a Home Inspection
A home inspection is an essential element of the home buying process for protecting a buyer’s financial interests. For example, learning that a home you’re interested in may need a new septic system costing $10,000 can change your mind about buying it or the amount you’re willing to spend. Without a home inspection, you might not find out about the problem until after you take possession, and you will lose any negotiating leverage you might have.
Another consideration is the health and safety of your family. Home inspections can uncover potential hazards in a home, like bad wiring, unsafe heating, or asbestos that the average person would not find during a pre-closing walkthrough. As mentioned in an earlier article, radon gas levels in Fairfield County are higher than the national average. Risking material damage is one thing. Risking the health of the occupants is another matter. It should make no difference that this is a sellers market.
Should You Waive The Inspection?
As a general rule, the answer is no unless you’re willing and financially able to assume all potential risks. Waiving the inspection is especially problematic in an older house. That being said, there are instances when waiving the inspection is more of a calculated risk.
If, for example, you are buying new construction and the home is under the builder warranty, or if the seller of a home or condo has had existing conditional reports compiled within the past year, it is “potentially” ok to waive the right to an inspection, IF it’s the only way to ensure your offer is accepted.
It all comes down to the amount of risk you’re willing to take. Remember, even new construction can have problems that an inspection could uncover. The bottom line, spending your money on an inspection is always a good investment.
Many Buyer agents have come up with a workaround to make their clients’ offers more competitive and still protect them. Have an inspector accompany them to a showing to look for red flags. Greenwich Home Inspections offers this service to both agents and buyers alike. Don’t let a sellers market dissuade you.
In our 50 years of experience in the home inspection business, in both buyers and sellers market situations, we have found that the home inspection is a very valuable tool. The more you know, the more informed your decision and your offer will be,
Call us and schedule a meeting with one of our professional home inspectors.