The home inspection
Have you heard a lot of chatter about home inspections during these last few years? Do you have friends who waived the home inspection to compete for the property they wanted? What’s the skinny on the home inspection?
The WB 11 Offer to Purchase (the official Wisconsin purchase agreement used for real estate transactions) allows the buyer to make an offer contingent on a home inspection. There is a box on the form that is either checked or left blank to signify the buyers’ choice. Inspection or no?
If you are competing for the home of your dreams against 25 other buyers, waiving the home inspection may give you some advantage. But should you do that? Such a great question! Some buyers waive it and then schedule an inspection as soon as they close the transaction and own the house. They decide to deal with defects themselves after purchase. Some buyers have zero tolerance for the idea of buying without an inspection. They are team “Inspection or Bust”! I work with both types of buyers. Here are a couple of things to consider:
What is the age of the house? If the house is 70 years old, it typically has had several different owners. It may have suffered abuse or lack of maintenance. The current owners may have limited knowledge of pieces of the home. If the house is only a few years old, the scenario is entirely different.
What things have the sellers disclosed? The more information available, the easier to decide whether or not to inspect. If the sellers disclose that the roof or the mechanicals are old, the buyers can factor that into their budget when making an offer.
How much cash do the buyers have for the purchase? If the buyers have strong cash reserves, they might decide they can afford issues that arise from a post-closing inspection.
How badly do the buyers want the house? When buyers find their dream house, or when they have an extremely short timeline, they may choose a high-risk strategy to win in a competitive market.
If buyers choose to waive the inspection, they are required to sign a document indicating they recognize the risk they are taking and agree to hold the firm harmless. While I can’t recommend that buyers waive the inspection, I always honor their right to do so. Waiving the inspection is an extremely strategic maneuver in this competitive market.
Sometimes buyers offer to pay for defects noted in the inspection. While this strategy does not yield the same advantage as waiving the inspection, it does strengthen an offer. For instance, the buyer might make his offer contingent on having an inspection but then offer to cover up to $10,000 in total repairs/cures of any defects flagged.
A lender recently told me that he rarely sees offers that include inspections. Did I mention we are experiencing a very competitive sellers’ market?