More buyers are skipping home inspections. Tales of bats, termites and asbestos should make you think twice.
▪ Home inspections are a key step in the homebuying process. In most transactions, a buyer includes what’s called an inspection contingency in their sales contract. This allows them to get a professional inspection of the property — within a certain number of days — and then renegotiate based on the inspector’s findings. However many buyers are skipping this step to get ahead in today’s competitive market. According to data from real estate brokerage Redfin, 20% of winning buyers waived their right to an inspection in June. That’s up 13% from a year earlier.
▪ There is a lot of competition for homes in certain areas,” says Karen Kostiw, a real estate agent with Warburg Realty in New York. “Sellers are receiving multiple offers — often significantly above the list price — and buyers are desperate to distinguish themselves from the competition. To do so, many buyers are waiving their inspection contingency in order to win the bid.” Waiving that contingency can have grave consequences: flood damage, mold, mildew, pest infestations or other costly repairs and concerns, up to structural and safety issues.
▪ Even when an inspection doesn’t reveal major problems, it can provide a buyer with important information about the maintenance and repairs they may need to take on later.
▪ “The dangers of waiving the home inspection can be significant,” says Kathleen Kuhn, president and CEO of New Jersey inspection company HouseMaster. “Without a home inspection, the homebuyer has no way to budget for major repairs or system replacements down the road. These costs can really add up.”