Do I Need a Home Inspection?

Should I Have My Home Inspected?

The housing market is still sizzling. Even with higher inflation, higher interest rates (approximately 5% on a 30 yr. fixed), some buyer resentment and a bit more inventory, the demand for a home in our area keeps us solidly in a seller’s market.

Buyers are stuck with a market that dictates that sellers get to call the shots. In traditional markets, contracts contained contingencies that tended to favor the buyer. For example, sellers usually paid for home warranties, would typically receive about 97% of the last asking price, and might credit some of the buyer’s closing costs.  The average days on the market was about 100 days, buyers would have 10 days to do any inspections and then ask the sellers to fix issues found on a home inspection with the “threat” that they could cancel the contract if the sellers and buyers didn’t come up with an “equitable” solution.  This is on top of the traditional contingencies that are preprinted into standard contracts such as financing, seller paid title insurance and more. 

In the last few years, because of the historically low inventory, the script has flipped. None of the traditional contingencies are now assumed. It is possible, and more favorable in an offer, if the buyers pay some of seller’s closing costs.  Frequently, buyers pay for their own home warranty, and it’s possible that buyers pay much more than asking price.

One trend that has become a popular tactic among buyers to entice a seller is removing a home inspection contingency.

Of course, as a buyer’s representative, I would never suggest this, but some buyers still opt to waive the inspection contingency.  As an aside, there is a difference between not doing an inspection at all and doing and inspection but still buying “as is,” or not asking the seller to repair any items found in an inspection.  There are many variations of the inspection/remedy contingency that buyers can ask for, and in many situations, a seller might agree.

Most commonly, a buyer will purchase “as is” but reserve the right to void the contract if they find issues during an inspection that they cannot live with. This opens up a whole can of worms because of the grayness of the verbiage.

Since we now have a two year history of this market, and more specifically, the waiving of home inspections, we are starting to see a few lawsuits from home buyers who did not do a home inspection and later found something that probably would have come up during the inspection.  Because of this, I make my sellers aware of this possibility and the risks involved.

If I have a listing and offers are pretty much identical except one will waive the inspection and the other will do an inspection and purchase “as is,” I will recommend accepting the one with the inspection, thus putting the burden on the buyer and their inspector.

Another suggestion is to have the house pre-inspected. If my sellers agree, they must disclose the inspection report to potential buyers. They should provide receipts if they choose to address inspection items. This will help avoid issues down the road. This does NOT preclude a buyer from asking to do their own inspection but does give everyone peace of mind.

Please contact me if you would like recommendation for certified home inspectors.