No doubt about it, the real estate market is red hot. And, when the market is red hot, buyers compete for homes and want to strengthen their offers as much as possible. One way of strengthening an offer is to remove certain contingencies in the contract. To get the home you want, waiving your home inspection contingency may seem like a good idea.
But waiving your home inspection can end up being a really costly mistake.
I very rarely recommend giving up your right to a home inspection when working as a Massachusetts buyer’s agent. Giving up something as important as your home inspection should not be taken lightly and is definitely not for the faint of heart.
What Is A Home Inspection?
A home inspection is typically performed by a licensed home inspector. They are trained to assess the structural components of a home, the safety of the home and the general systems that make up the home. An inspector will review the HVAC, plumbing, electrical, building structure and components as well as areas that affect the well-being of a home.
The key is they are trained to identify problems and spend a good part of everyday inspecting homes. They will spot defects that you or I would not typically see while touring a home.
While you or I might spot a broken window, it would be near impossible for us to spot 20 feet of sill damage from termites, a cracked heat exchanger in the furnace or even mold in the attic. But most likely your home inspector will.
What Is A Home Inspection Contingency?
A home inspection contingency is a standard contingency in most Massachusetts real estate contracts. It allows a small window of opportunity for a potential buyer to inspect all the varying aspects of a home’s safety, soundness and function.
Most home inspection contingencies allow for the buyer to back out of a deal if any latent defects arise during the home inspection. In reality, if some serious home inspection issues arise a solution is negotiated between the buyer and seller.
Why Would I Want To Waive My Home Inspection Contingency?
Buyers are sometimes encouraged to waive their home inspection contingencies by sellers or listing agents to make an offer more attractive to the seller in a competitive market.
Let’s look at it from the home seller’s perspective. A home inspection is anxiety-provoking to the seller. There is a possibility that serious unknown issues arise during a buyer’s home inspection that they were unaware of.
A risk of the buyer backing out of the deal after a bad home inspection leaves the seller having to put the home back on the market Or, maybe there are a lot of smaller issues that arise during the inspection that add up to significant money that causes a renegotiation between buyer and seller. Either way, it will cost the seller money or worse, they can lose a buyer.
A buyer’s home inspection contingency leaves the seller with so many unknowns.
Take two offers that are relatively equal but one has a home inspection contingency and one does not. The offer that has waived the home inspection contingency will reduce a seller’s risk and quite possibly strengthen their financial position.
It is far more attractive to the seller for a home buyer to forgo their home inspection.
Many home buyers are opting to remove home inspection contingencies after losing offer after offer in a competitive real estate market. Buyers start to feel desperate and just want to get the process done.
Why Is Buying A Home Without A Home Inspection A Bad Idea?
When you buy a home without a home inspection you are taking a huge risk.
The risk that there may be significant issues with your new home can add up to tens of thousands of dollars. A home inspector not only points out the obvious defects they are trained to detect latent defects in the home you are purchasing.
The simplest way to explain this is a real-life experience. I have been working with a couple to buy a home. They found a beautiful home they fell in love with. The home had so many recent updates and appeared to be in pristine condition. My clients even asked about removing the home inspection contingency to strengthen their offer.
We discussed the possibilities of waiving the home inspection contingency. But at the end of the day, we concluded for them, it was not a wise decision.
And boy, weren’t we glad we didn’t forgo the home inspection on this home. This home was gorgeous. I even went in feeling we wouldn’t find much of anything. Yet when it was all said in done we found about $16,000 worth of issues that needed to be taken care of immediately…. from a leaking soil pipe to rotted sheathing under the siding to a large amount of mold in the attic.
Without the home inspection, we would have paid top dollar for a home that needed a significant amount of repairs. Or, the mold could have been a serious health issue that went undetected.
The good news is they negotiated the seller completing all of the repairs prior to close….. all because they kept their right to complete a home inspection by not removing the home inspection contingency.
Is there Another Way I Strengthen My Offer Without Waiving My Home Inspection Contingency?
One way is to state in the home inspection contingency that the buyer can only back away if non-cosmetic repairs result in a repair of over XXXX.XX amount of dollars.
By using a home inspection contingency that sets a dollar amount, you accomplish two things.
First, you retain your right to a home inspection and if any repairs arise that are more than you are willing to or can handle spending comes along, you are still protected from purchasing that may have significant safety, structural or system issues.
Secondly, you give the seller a little peace of mind. They don’t have to worry about buyer’s remorse or be nickeled and dimed by every little issue with the home.
You still get your home inspection while still strengthening your offer.
Another alternative is to do a home inspection before submitting an offer. By doing so you can put your best offer forward knowing whether you have significant work ahead of you or not.
Think About A Home Inspection Before Putting In An Offer
One strategy to strengthen your offer by removing your home inspection contingency in a contract is to do a home inspection before submitting an offer on a home.
By doing a pre-offer home inspection, you get to still have your home inspection to make sure you are buying a sound house, you strengthen your offer and you make your offer more attractive to a home seller.
It is a win-win strategy for both homebuyer and seller.
It Is Your Decision Whether to Waive The Home Inspection Contingency or Not
Ultimately it is your decision whether to remove the home inspection contingency from your offer in Massachusetts. Don’t let an agent or home seller talk you into waiving a home inspection if you are not comfortable with it.
One or more costly repairs can turn the American dream into a nightmare for the unseasoned home buyer.
Yes, this market is stressful for home buyers, but don’t let that stress lead to a bad decision. Your misguided decision could end up costing you tens of thousands of dollars down the road.
There is no doubt waiving your home inspection can strengthen an offer, but before you do sit back and assess a few things.
The first question asked should be…. do you have enough knowledge to assess a home alone? A seasoned homeowner or someone in the trades may have enough knowledge to go through a home with a fine-tooth comb and assess if there are any serious issues with a house. Of course, age and condition may play some part in your decision of whether to waive a home inspection contingency or not.
If you do waive your right to a home inspection and some serious issues occur that need attention, do you have the money to handle a repair?
Certain issues like a leaking roof or a furnace that needs replacement are issues that need immediate attention and can not be put off. Make sure you have cash reserves to handle any significant repairs that you may have missed because you waived your home inspection contingency.
- Kyle Hiscock Why You Should Have a Home Inspection
- Paul Sian Negotiating After the Home Inspection
- Bill Gassett What to Inspect When Buying a Home
- Sharon Paxson Don’t Buy A Money Pit
Haverhill Homes for Sale
Waiving Your Home Inspection Is a Bad Idea! is written by Kevin Vitali of EXIT Group One Real Estate. If you would like to sell your home or buy a new home give me a call at 978-360-0422 and let’s get the process started.
Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest. Including the following communities and the surrounding area- Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham, Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford