Eager Buyers Are Skipping Home Inspections. Is It Too Risky?
A standard home inspection can increase your confidence about a property’s condition before signing on the dotted line. Getting a professional opinion also allows you to negotiate repairs with the seller or back away entirely from buying a property with major issues.
If you’re planning to buy a home this year, here’s what you should know before agreeing to waive an inspection.
Why are buyers willing to waive?
An estimated 28 million Americans plan on buying a home in the coming year, according to NerdWallet’s 2021 Home Buyer Report. But at the end of 2020, the supply of available homes in the U.S. was just 1.04 million units, according to data from the National Association of Realtors — the lowest number since the NAR began collecting data in 1982.
With multiple buyers looking for listings, the pressure to craft a compelling offer can be intense. In the fourth quarter of 2020, the National Association of Home Builders Housing Trends Report found that being outbid was the most common reason buyers cited for not yet purchasing a home.
So it’s unsurprising that eager buyers are amenable to waiving the home inspection. Real estate brokerage Redfin found that in December 2020, the home inspection was waived in more than 30% of successful offers put in by its agents. Though that data covers offers in four areas — Boston; Portland, Oregon; Washington, D.C., and the state of New Jersey — it’s more than double the number that Redfin says waived inspection in December 2019.
How to make a strong offer without waiving the inspection
If you aren’t comfortable cutting corners on the home inspection, know that there are other tactics you can use to make your offer more appealing to a seller.
Be fully preapproved. Having a mortgage preapproval letter from a lender in hand demonstrates not only that you’re serious, but that you’ll be able to get the financing to close the deal.
Ask for an “informational inspection” rather than an “inspection contingency” in your offer. This language lets the seller know you’ll be getting a full professional inspection, but that it’s for your information only: you won’t be asking them to pay for issues it may uncover.
Make a larger down payment. Yes, this may mean saving up longer before trying to buy a home but seeing more cash upfront can be alluring to sellers. It’s more money in their pockets right away and signals that your financing is solid and the deal will close. You don’t have to put down the full 20%, but an offer with a 3% down payment may not stand up against bids with 10% down.
Add an escalation clause. Sellers like this clause because it eliminates the need for back-and-forth negotiation between competing buyers. For example, a client who offered to automatically bid $1,000 over any other offer up to $200,000 on a property that was listed at $189,900. The client’s offer was successful, getting the home for $201,000.
Even with a carefully constructed offer, you may still face rejection in this tough market. Brush yourself off and try again, and you’ll eventually find your happily-ever-after home.
Resource: lesainspections.com
