Should I Waive a Home Inspection to buy a house

The home inspection contingency is one of the key contingencies that should be considered before submitting a home offer.

The contingency clause permits the buyer to seek the opinion of a professional regarding the property and potentially back out of the deal if any problems are discovered. 

In fact most realtors would never recommend to their clients to waive the inspection. 

There are just too many things that can go wrong; and the buyer can be left on the hook with a huge amount of repairs to make. 

In fact the only reason that anyone can think of to waive the contingency is in a tuff buyers market where there are many bidders and very few sellers. 

If a buyer submitted a contract waiving the hone inspection contingency, it sure might get the attention of the seller. 

Regardless, is it a wise or foolish choice?

We will provide an in-depth analysis of both sides of waiving inspection contingencies. 

We will discuss the idea of foregoing the home inspection, the pros and cons of doing so, and other options that may be more beneficial for you but still make you competitive with other bidders.

Should I waive the inspection contingency

In the United States, waiving the inspection contingency is becoming increasingly common, with nearly 40% of homebuyers opting to waive this contingency in 2019.

Whether to waive the inspection contingency will depend on your unique situation.

If the market is competitive, your offer could make it more attractive but it could be risky if there are undiscovered problems with the property.

The likelihood of the offer being accepted may increase if you waive an inspection.

House buyers who submit contracts with lengthy inspection durations have a greater chance of their offers being rejected.

Even if you get a loan from a mortgage lender, an appraisal is necessary and required.

Consult your real estate agent, lawyer or home inspector before committing to this decision.

What is a home inspection contingency

A home inspection contingency is a provision in a real estate agreement that permits the buyer to back out of  the deal if major problems arise during the inspection.

The clause usually includes deadlines for inspecting and requesting repairs or altering the contract’s conditions.

Under normal conditions, buyers get a due diligence period which includes checking out the condition of the house. 

The waiving of a home inspection contingency implies that the buyer is buying the property without having a professional inspector come and check the right condition of the home.

Waiving this contingency can be risky since it exposes buyers to any potential repairs. 

Only buyers with experience should even think about waiving an inspection. There is just too much risk.

We are telling most of you NOT to do it.

How much does an inspection cost

The cost of a home inspection varies depending on several factors, such as location, property size, and scope of the inspection.

On average, a standard home inspection starts around $500 and goes up. 

Some inspections cost over $1000 depending on the size of the home, whether you have a pool, and other factors may come into play. 

The cost will depend on the market in which you live and the amount of competition in the area. 

However, additional inspections for pests, radon, or mold will usually cost more. 

A termite inspection will cost around $125 and is well worth it. 

It is necessary to include such expenses when considering your budget for buying a home.

Make sure you hire a licensed inspector who will give you as much information as there is about the property.

Pros of waiving the right to inspect

If you’re buying in a hot real estate market and trying to jump in front of other buyers, waiving inspection contingencies may give you the leverage that you need. 

You may even be able to negotiate a lower asking price or get necessary repairs taken care of before closing. 

Waiving inspection contingency can speed up the homebuying process as well by removing the need for documentation or an informational inspection.

Waiving can help in a hot market

In a seller’s market, leverage is key.

One way to attain this leverage is by waiving inspection contingencies. 

It’s a smart move especially if the home is in good condition or if you’re willing to take on necessary repairs. 

But it is a gamble.

The decision could ease the home buying process while potentially saving money on inspection costs. 

Nevertheless, it’s important to remember that waiving inspection contingencies also entails taking on all potential issues with the property, which could end up being costly in the future if significant issues such as structural defects or safety hazards emerge.

Cons of Waiving 

While waiving this contingency may seem advantageous in certain situations, it comes with its own set of risks. 

Unseen issues: By waiving the home inspection contingency, you are essentially accepting the property “as is” without the opportunity to discover any hidden problems.

Even though a house may seem perfect at first glance, there could be underlying issues that only a professional inspector can identify.

These issues may include faulty wiring, plumbing problems, structural damage, or other major issues that could be costly to repair.

Financial risk: Without a home inspection contingency, you assume the risk of uncovering significant problems after the purchase.

These unforeseen issues could lead to expensive repairs and additional expenses, potentially putting a strain on your finances. 

Impact on negotiations: The absence of a home inspection contingency limits your ability to negotiate with the seller.

In a competitive market, where multiple offers are common, waiving the inspection contingency can make your offer more appealing to the seller.

However, this also means that you may have less leverage in negotiating the purchase price or requesting repairs based on any issues discovered later.

Lack of peace of mind: For many prospective buyers, a home inspection is crucial for their peace of mind.

It offers reassurance that they are making an informed decision and purchasing a property in good condition.

Legal implications: In some cases, waiving a home inspection contingency may have legal consequences.

If you discover a major issue with the property after the purchase and had waived the inspection, you may have limited legal recourse against the seller.

Homebuyers have time to inspect

Homebuyers have time to inspect a property and should take advantage of the inspection contingency clause while buying a new home. 

Inspecting a property thoroughly can potentially save you thousands of dollars in unexpected repairs and give you peace of mind.

The process can also provide leverage for bargaining chips with the seller’s asking price and help identify potential problems that could lead to serious issues down the line. 

Consultation with a certified inspector or professional is recommended as they can help identify safety hazards and structural issues that may not be apparent to prospective homebuyers. 

That is the whole reason to have an inspection in the first place. 

Imagine you find something wrong with the home after closing.  What if you found termites or a leaky roof. You might have wished you weren’t so quick to make a decision. 

Contingencies can make you poorer

Making the decision to forego these when purchasing a property should not be taken lightly. 

While this move can increase your chances of getting the property in a competitive market and quicken the home buying process, it also involves forfeiting your leverage for negotiating repairs or backing out of the sale.

This may lead to unexpected expenses on repairs that could run into thousands of dollars. 

• For example, what if you found out after you purchased the house that there were thousands of dollars in foundation work the home needed.
• Or what if the home’s air conditioning units weren’t operating properly and needed to be replaced.
• According to this source, they can cost as much as $7,000, or more

What we are saying is realizer there is a risk to what you are doing.

Difference between pre and during escrow inspection

During home buying process, understand the difference between a pre-purchase inspection and one done during escrow. 

A pre-purchase inspection may not be as comprehensive as an escrow inspection report that uncovers significant problems like wiring or HVAC issues.

If you find the results of the inspection and there are a number of things wrong with the home, you can cancel the deal and only be out your option money. But you would still get your earnest money back, also known as the money deposit. 

Now, if you waived the inspection, but you decided to have an inspection during the escrow period and you discovered something wrong with the roof, and you backed out of the deal, yes you would lost your EMD. 

This is normally equal to 1% of the house purchase. 

So if you bought a home for $300,000, you would lose $3,000

Moreover, by waiving this contingency clause in a hot real estate market, buyers may use this as a bargaining chip for a cash offer.

 It’s necessary to weigh potential risks of waiving contingencies against peace of mind when considering your best interest.

Alternative Options to Protect Buyers

There may be situations where a buyer might want to forgo the inspection.

Pre-Inspection: Before deciding to waive the home inspection altogether, a buyer can opt to conduct a pre-inspection. 

This involves hiring a professional inspector to assess the property before making an offer.

While this does come at an additional cost, it can provide valuable insight into the condition of the property and help uncover any potential issues.

The only risk here is if the buyer pays the home inspector and then the seller accepts another contract from another buyer. 

The risk would be the cost of an inspection, or around $500. 

Seller’s Disclosure: Requesting a seller’s disclosure is another way to get the information about the property’s condition.

Many sellers are legally required to disclose any known material defects or problems.

Buyers who review this document can then become aware of what might be wrong with the property. 

Remember though, if there is an issue that is wrong with the house that the seller is not aware of, they usually can’t be help responsible for it after the fact.

Request for Repairs: Instead of eliminating the home inspection contingency entirely, buyers can modify the terms to include a request for repairs.

This allows buyers to renegotiate or request that specific issues be addressed by the seller before proceeding with the purchase.

It provides an opportunity to rectify major concerns without completely backing out of the deal.

Not waiving the appraisal: If the appraisal came in low; the lender would require the buyer to put up the difference in cash. 

If the buyer didn’t have the cash, they would be able to get all their earnest money as long as they had the appraisal contingency signed by all parties. 

Specialized Inspections: Depending on the property type, additional specialized inspections may be necessary. For example, in older homes, issues such as faulty wiring or outdated plumbing systems may be a cause for concern.

Purchase Price Adjustment: In some cases, buyers may opt to waive the home inspection contingency but negotiate a purchase price adjustment based on the condition of the property. 

Final Take-aways

Waiving an inspection contingency may speed up the process and make your offer more attractive to sellers. 

But yes, you might discover a ton of repairs to make that could cost you thousands of dollars. 

Waiving inspection contingencies can be a wise or risky move; but it may be necessary to get the home of your dreams. 

Remember the worst case scenario if you want to inspect the home is that the seller won’t accept your contract. 

You might be able to negotiate them with the seller to find a middle ground that works for both parties. 

Be sure and weigh all the pros and cons. 

Get a cash offer on a house you want to sell fast in Texas.