Right now, the housing market is absolutely a seller’s market. There are more people looking to buy houses than there are people looking to sell. That means that prices are high and many homes have multiple offers.
A house in my neighborhood recently had more than 25 offers after being on the market for only one weekend. To try to incentivize the sellers to pick their offer, buyers will place all sorts of elements in their offer. If you have the money, one great option is to offer to buy in cash. That doesn’t mean you’re showing up with a bag of cash; rather it means that you won’t be financing your purchase.
If your offer isn’t contingent on a mortgage, it’s less likely to fall through, and thus less likely to be a hassle for the sellers. Another thing people do is offer to waive the inspection. Failed inspections are another reason that home purchases fall through. But should you waive inspection when buying a house?
What is a home inspection?
A home inspection is when an inspector comes into a house and looks at both the exterior and interior for any issues, both major and minor. They will look at the walls, foundation, roof, any visible plumbing, and electrical. They will check the faucets and the outlets. They’ll look at the HVAC system and appliances. They will look for signs of water damage or other damage that the seller might be hiding or might not be aware of. Basically, a home inspector will look at your house and let you know the condition of the house.
What is a home inspection contingency?
In an offer to buy a house, a home inspection contingency basically says that if there are major defects found, the buyer can walk away from the proposed sale. This is definitely something that protects the buyer. But even if the defects aren’t so bad that the buyer wants to walk away, the buyer can also request that the seller fix the issues, reduce the purchase price, or give cash at closing so the buyer can fix the problem themselves.
Should you waive inspection?
As you can tell, the home inspection benefits the buyer. They know what they’re getting. A home inspection can cause a sale to fall through or cause the seller to have to pay for repairs, either before the sale or in the form of credit to the buyer. So sellers definitely find the idea of waiving inspection very appealing.
It can be very tempting to waive inspection. After all, you’re looking at a house and it looks great. Maybe you even know the sellers and know that they take very good care of their house. And that may all be true – but the sellers may not even know that there is a problem. There could very easily be a crack in the foundation that they haven’t noticed or a roof leak into the attic.
Many times, the problems that inspectors find are small and easy enough to repair. If that were always the case, I would say yes, it can be a calculated risk to waive inspection when buying a house. But the problems could be massive. What if you buy the house and suddenly discover that the foundation is cracked or that the electrical isn’t up to code and is a massive fire hazard? It can be tempting to waive inspection in order to get the sellers to take your offer, but in my opinion, it’s much too big of a risk.
- How To Buy A House During COVID-19
- 4 Reasons Saving for a House Is Easier Than You Think
- How to plan and save for your first home
Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.