Thanks to a fast market with low inventory, there has recently been a huge uptick in buyers waiving the contingency of a home inspection to make offers more compelling to sellers. Waiving contingencies removes potential obstacles to closing the sale as planned, which is appealing to sellers, but puts buyers at a disadvantage. So, what protection does a home inspection contingency offer? And is the risk of waiving it worth the reward?
Home Inspection Basics
When an accepted offer is contingent on inspection, the buyer arranges and pays for a qualified inspector to spend a few hours thoroughly reviewing the condition of the home and testing for health, safety, and structural issues. I suggest buyers come onsite toward the end of an inspection to have any findings pointed out in person and ask questions. The inspector will provide a summary and detailed report for the buyers and may also give estimates for repair costs. Armed with thorough information on the condition of the property, buyers can then decide to renegotiate or rescind their offer based on the findings of the inspection, or move forward with peace of mind, and perhaps a few items for their new home "to-do list".
What's in an Inspection Report?
Inspections are fully for the benefit of buyers and reports will note issues big and small. The top items found on home inspection reports include loose or missing outlet covers, cosmetic cracks in walls, and missing smoke alarms. These items are relatively easy and inexpensive to fix but might be safety hazards. Other issues, like significant structural, plumbing, or electric problem, are not always obvious to the untrained eye and may need repair soon that could cost many thousands of dollars. These are the type of findings that could save a buyer from a money pit!
Why Some Buyers Are Willing to Waive
Nobody likes rejection, and if buyers have lost a few offers in a bidding war, it can be tempting to waive the inspection contingency to boost the chances of acceptance. Although being outbid is the number one reason offers are not accepted, in highly competitive markets waiving contingencies can be an efficient additional tool. Some buyers are especially willing to waive inspections on newer construction or on homes where an inspection was done recently, assuming the risks are low.
Should I Waive a Home Inspection Contingency?
I strongly recommend having a home inspection. In addition to peace of mind regarding the safety of your home, you want as much information as possible for a purchase that will likely be one of the largest investments of your life. You can't detect every issue on your own, and a significant repair that would take tens of thousands of dollars to fix would change most buyers' minds about moving forward with a sale. That doesn't mean you can't make your offer compelling in other ways.
There are a whole host of negotiating tools available and contingencies don't have to be "all or nothing". A good agent who knows your current local market can recommend effective negotiation strategies that present fewer risks than those that may accompany waiving your inspection contingency. If you are ready to jump into the competitive Minneapolis market and win, I'm here to help!