By Alena KairysApr 22, 2022
In order for your offer to be considered in an aggressive real estate market, you may need to take every advantage available. One way you can make your offer more compelling is to forfeit your inspection. If you’re desperate to make your offer stand out, here’s what you should consider before waiving your inspection.
Why Does the Inspection Matter?
Before understanding the possible consequences of an inspection waiver, it’s important to understand the significance of having a home inspection. When a home goes under contract, the buyer has the option to have a property inspection conducted before going to the closing table. The inspector will assess the condition and safety of the house, including the roofing, HVAC and plumbing, and foundation. Additionally, if the buyer has an inspection contingency on their offer, it means moving forward with the deal is dependent on the inspection details. They can ask the seller pay for the repairs (concessions) or negotiate a lower price. If you decide to back out based on the results, you’ll be able to get your earnest money back. Waving this means the seller won’t be obligated to pay for repairs and that you’ll agree to buy the home as-is. Keeping the inspection and contingency in place protects your rights as a buyer, but waiving it removes those protections.
Why Waive the Inspection?
Waiving your inspection can be risky, so why do it? In a seller’s market, it’s sometimes necessary to pull out all the stops with your offer to make it competitive. An inspection is just one more thing for the seller to worry about in a real estate deal, so eliminating that possible hurdle will make the situation more convenient for them. Waiving your inspection also makes you seem like a more serious buyer and can allow the process to move faster.
Removing the inspection can make your offer more appealing, but it doesn’t come without risks. Without an inspection, you could find that your new home needs major repairs. Even if a home seems like it’s in good shape, you won’t get a full picture of the home’s health without a full inspection. Not going through with an inspection is a huge hazard; be sure you are financially prepared to pay for any significant repairs. The extra time needed to fix up the home will also delay how soon you can move into it. Another danger is that if you decide to back out of the sale, you may lose your earnest money deposit.
It may seem like the only way to get your offer on the table is to remove your real estate safety net, but that doesn’t have to be the case. Your real estate agent can help you structure your offer to suit your comfort level. Instead of eschewing the inspection altogether, you can have an “information only inspection” where the inspection is performed but you don’t request concessions. You could also keep the contingency but include a cap for how much the seller can be asked to fix. This will let them know you aren’t trying to force them to fix every little thing. You might consider a clause that allows you to safely exit the contract if the informational inspection exposes too many problems. Some buyers are using a “pre-inspection” to help them make a stronger offer while having an inspection. In this setup, the buyer askes the seller if they can have a home inspection before submitting an offer. If the results are acceptable, the buyers can submit a contract that waives the inspection contingency. If the inspection comes back with too many issues, the buyers can simply move on and will have only lost a few hundred dollars from the inspection.
The bottom line is that it’s rarely a good idea to buy a home without at least knowing the property’s condition. There are a few workarounds to totally disregarding an inspection—be sure to work closely with your real estate agent to help craft the right offer for you. The more you know about your future home, the more informed your homebuying decisions will be.
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