Experts say: Don’t waive the home inspection
It’s a challenging market for home buyers in many areas of the country. Demand is high and housing supply is generally low.
With so much competition, some buyers are opting to waive a home inspection to make their offer more attractive to sellers.
But ask just about any expert and they’ll tell you waiving the inspection isn’t in your best interest.
Here’s why a home inspection is recommended and sometimes required.
Plus, we’ll give you some options to make your offer more attractive without having to pass on an inspection.
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Why a home inspection is important
Ask most experts, and they’ll likely tell you it’s not a good idea to waive a home inspection.
“A home inspection is of paramount importance when purchasing a home,” says Rajeh Saadeh, a real estate attorney in Somerville, New Jersey.
“Having [the home] inspected will ensure that it’s worth the price you are paying for it. Plus, it will help you understand how much money is needed to have the property repaired, if necessary.”
Saadeh continues, “For most people, a home is the largest purchase made in their lives. And it’s important from a business and financial perspective to understand the true condition of that home before moving forward.”
“There are always items that come up [in the inspection] that are easy to overlook or not quite visible to the untrained eye.” –Chris Bello, Real estate agent
Chris Bello, a real estate agent with Keller Williams Memorial in Houston, agrees.
“I highly encourage my clients to get an inspection done,” he says. “There are always items that come up that are easy to overlook or not quite visible to the untrained eye.”
“For a few hundred dollars, you can identify several items that can help you negotiate price reductions or repairs. Or you can even back out during your option period if you decide the house needs more work than you’re willing to do.”
Is waiving a home inspection allowed?
Unless your mortgage lender requires a home inspection, you are allowed to waive it if you choose.
According to the Home Buying Institute, the home inspection is almost always completely optional.
“It is rare for a lender to require you to have a professional home inspection done. Lenders typically don’t care whether the property is inspected, although they may encourage you to pursue a home inspection,” says Saadeh.
He explains that what lenders care about is the value of the property — which is determined by a home appraisal.
So while lenders will require you to get the home appraised, they’re much less likely to require an inspection.
That means, if you want, you can opt to waive a home inspection to make your offer look more appealing to the home seller.
But by doing so, you might overlook issues that will be costly to repair. And you’ll definitely miss the opportunity to have the seller pay those costs for you.
Cost vs. benefit of home inspections
Your lender might not care about the home inspection. But as the home buyer — and the one who will have to pocket repair costs — you should.
“Buyers, even investors, should never waive a professional home inspection,” Saadeh says.
Even if there’s no chance the seller will cover repair costs, he explains, “the only way one can understand the physical condition of the property is if a licensed home inspector performs a thorough inspection with a trained eye and renders a report.
The cost of a home inspection — typically $300-$400 — is minimal compared to the cost of home repairs, which could be tens of thousands.
That way you can be sure you know about any deal-breaker issues before you sign off on the purchase.
Consider that the cost of a home inspection is minimal compared to the peace of mind it will likely bring you.
Home Advisor estimates that the typical cost of a home inspection ranges from $279-$399.
Now consider waiving the home inspection only to find out your new home needs thousands of dollars — or tens of thousands — in repairs. You might wish you’d paid the few hundred up front.
What’s a home inspection contingency?
A ‘contingency’ is a condition that has to be met for the real estate purchase contract to be binding.
“A home inspection contingency permits a buyer to have a property inspected, and enables the buyer to terminate the transaction if the inspection reveals defects that the buyer does not waive and the seller does not repair,” says Saadeh.
In other words, this contingency provides an “out” for you if your home inspector discovers defects or issues that sour the deal.
A home inspection contingency gives the buyer an “out” if the inspection turns up issues the seller won’t pay to repair.
“It gives you the right to cancel the contract unilaterally during the inspection period for any reason,” says Dylan Lennon, a Realtor in Asheville, North Carolina
“You have the option to waive this contingency and proceed with a purchase. But you should only do so after discussing the implications with your real estate agent and real estate attorney.”
When waiving a home inspection might be ok
Generally, experts only recommend waiving a home inspection if you have a trained eye for real estate, and you’re certain you can pick out potential issues without a professional inspection.
For the average home buyer, that won’t apply.
But experienced contractors, investors, or real estate professionals might be comfortable doing so.
“Usually,” Lennon says, “buyers only opt for this route when they are fairly confident that the house is in good condition or are fairly confident in their ability to handle the obvious repairs on their own.”
Henry Angeli, a real estate investor and Realtor in Jacksonville, Florida, says there’s another reason why you might want to consider forgoing a home inspection.
“If you personally know the home builder who constructed the property, you might feel more confident about the quality of the home,” he says.
Additionally, savvy investors and experienced home flippers often choose to waive inspections.
“They’ve purchased enough homes to have a good feel for how much work a house needs. If the numbers work for them and they are willing to accept a certain amount of risk, they may opt for waiving the inspection,” Bello says.
Of course, if you plan to purchase the home and then demolish it to build another on the homesite, it makes sense to skip a home inspection.
How to get your offer accepted without waiving the inspection
It’s true: Keeping a home inspection contingency in your contract could make you appear less appealing to a seller.
But it’s possible to get the seller to say ‘yes’ to your offer without waiving the home inspection.
“Most sellers are reasonable and will allow for an inspection period to ensure that the home’s condition is acceptable for safe living and reliability,” says Angeli.
“You can always sweeten the deal for sellers by trying to close faster, offering to pay cash, [or] eliminating other contingencies in your offer — such as a contingency to sell your home within a certain time frame.”
“You can sweeten the deal for sellers by trying to close faster, offering to pay cash, [or] eliminating other contingencies in your offer.” –Henry Angeli, real estate investor & Realtor
Another alternative is to “offer a larger non-refundable binder deposit or shorten the length of your requested inspection period,” suggests Lennon.
Lastly, if the seller says they are uncomfortable with a home inspection contingency, ask if it can be permitted under the condition that the seller is not required to make repairs or offer price reduction credits.
“That will enable you to have the inspection done and keep the right to cancel if you don’t like what is found, while also making it clear that the seller is not going to change the property or the deal as a result of inspections,” Saadeh says.
The bottom line
A home inspection can turn up expensive problems with the home.
When you’re aware of these issues ahead of time, you can often negotiate that the seller pays to fix them — or, you have the option to back out if they won’t.
Waive the home inspection, and you’re agreeing to pocket the cost of any and all issues you discover after moving in.
Home inspections typically only cost a few hundred dollars, which is a relatively small price to pay for peace of mind when buying a home.