You better not be thinking about waving inspections.
I keep hearing people talk about the idea of waving inspections when they're
looking at buying a house and it's insane.
And I came across this post on Reddi where this person was
talking through their experiences.
I wanted to share this story with you really quickly.
So you could see like how insane the idea is to wave inspections.
And then I want you to be able to see if this is something that like, are
you considering, and maybe you want to reconsider if that's something
that you're looking at doing.
You can read through the Reddit post in the link, in the
description, but through this, they.
A projected $30,000 at almost immediate costs.
So they talked about, they put in their seventh offer on home,
which obviously like this market is tough to navigate through.
And so they were saying, Hey, we put in our seventh offer
on our least favorite house.
And then it was finally accepted.
I thought it was funny that they even mentioned, like we put it in and
this is like our least favorite home.
This is just the one that, that worked, but they were still willing
to open and expose themselves to these potentially damaging things.
On a home that they really didn't even all that much.
And so they offered 5% over listing with an as is inspection contingency.
So basically what that means most of the time is that a seller will
allow you to actually have an inspection, but not request repairs.
So you can have it for your own usage, but then not actually have a conting.
On it.
Okay.
And so what they did in here is they did the inspection and they did
end up backing out of the contract.
I'm not sure of all the legality of how they exited that contract.
We'll talk about that here in a little bit, but the inspection repairs that came
back were septic system needed repair.
AC was on the verge of failure.
Windows need to replace a lot of them were damaged.
Concerns about main water service line, visible mold in the attic in
three times the EPA limit of radar on.
And so all of this in here was an estimated about $30,000, again of
almost immediate repairs for health and safety, to be able to live in.
Home now likely a lot of these things probably would've got called out on
an appraisal as well, depending on how strict that appraisal was and if they
were going, depending on the loan type that they were using, but that 1,700,
so $1,700 in inspection cost have this.
because they need some individual inspections for some of these things,
save them $30,000 in the long run.
And I think that's really important to consider because when you're
going into looking at buying a home and you're saying, yeah,
we'll just wave the inspection.
That's not a big deal.
It's no, it's a huge deal.
There's a, there can be a lot of expenses on the other side that
you might not be able to catch.
And at the same time kind of questioning are you prepared to be
able to spend, $1,700 in inspections up front before you purchase home, to
make sure that it's a good financial decision for you and your family?
Cause I would much rather spend $1,700.
Then not, and spend 30 on these extra costs as they come up and need repair.
When I move in and then all of a sudden they're causing issues for me and my
family, especially with things like mold, not to mention those are like long term
health costs that if those aren't being addressed now are going to come up as
like medical bills in the future, because that's going to be damaging to your body.
I know that increasing competition is happening.
It's causing people to do whatever they can to get a house.
But it would cost, like you might be able to say, yeah, we'll wave the
inspection just to get the home, but are you getting so caught up in this
frenzy of bidding on homes and doing everything you can to win a house?
That's you're not actually considering what could happen on the back end.
What happens if you wave your inspection?
Is that really good decision?
Because really I don't think.
It is unless you're really prepared and you understand everything that
could go wrong and you're prepared to be able to remedy that if you
do purchase a home and there's all this extra cost here at the end.
You might get the house, but can you afford to keep it is the big question.
There are ongoing maintenance costs with purchasing a home and an
inspection really is going to help you.
You'll be a good layer of protection for you of knowing what some of
those costs could be in the future.
So you can avoid them if you're not prepared to make that kind
of financial investment into.
Home, if it has some issues.
So here's how inspection contingencies work.
If you're not familiar with it.
an inspection contingency is a portion of the contract.
So when you submit an offer on a home, you submit this contract.
A portion of that likely will have an inspection contingency and
contracts are always negotiated.
So this can be different in your area or your stated.
This is all things that you can negotiate with the seller.
When you talk with your agent about this.
So what it does is allows you to inspect the home before.
Buying it to spot any expensive repairs needed, right?
It helps you be able to say yeah, we had to pay some money up front
for the inspector, but we identified X amount of repairs needed that
we need re that we need fixed before we're willing to move in.
And so for a lot of people, this can kill a deal.
They see house that they really like, but oh, it had this roof issue and we're, we
don't have the cash to be able to handle.
That issue in the near future.
And so we won't be able to move forward.
so usually what it does is allows the opportunity to get earnest
money back and exit a contract legally again, in the Reddit story.
It's I don't know all the details of that.
You're welcome to read through comments and everything to explore how they
exited that contract legally, cuz they had an as is inspection contingency.
But for a lot of contracts, again, this is a negotiated contracts are negotiated.
They're not just static things.
You can't just say this is what happens in my city and my state.
Contracts are negotiated.
All right.
They might have a template, but you can negotiate all of those items in
there if they're not what you want.
Okay.
And so for a lot of contracts and what's most ideal is being able to have an
inspection contingencies that says we have a certain period of time to be able
to inspect the property and see what the what's, what repairs are needed.
And then if we want to.
Exit the contract because the repairs are too much for us, or we can't reach a
negotiation on credits for the contract.
Then we can do so legally and receive our earnest money back.
Now I've also seen some contracts that say the seller can keep the earnest money
if you back out because of inspections.
I don't think that's in your favor personally.
And again, this is all negotiated.
Okay.
So there's four steps here.
First the inspection is completed within a time set on the contract.
Again, this is all negotiated.
So it might say that you as the buyer have seven days, 14 days, whatever, to be
able to inspect and then request repairs as needed that are up to your standard.
Then what happens is an inspector comes out and then
you would review the inspection.
And so you're gonna get an inspection report back.
Usually an inspection report is going to tell you I feel
like a good inspection report.
Usually almost seems like the sky is falling.
When you first look at it, it should be comprehensive and cover
a lot of details about the house.
And there's gonna be a lot of minor things in there that really aren't
too concerning, but there's also some major things that you might
need to consider in there as well.
I worked with a buyer once who they requested, like it was somewhere around
20 to 30 items from an inspection report and they were all little
things that actually didn't matter.
It was things like trim around doors and things.
Those things don't matter.
Things that we can go to, home Depot, wherever, and there's small dollar fixes.
Those aren't worth like fighting over on a contract.
In my opinion, what you're looking for when you're reviewing this inspection
are what are these things that are gonna cost us several thousand dollars?
Are these big things that we really need to be mindful of
that when we purchase this.
Those are going to be our costs that we now take on.
Are we ready to take those on that's?
What you're looking for?
These bigger ticket items in here.
Step three is then renegotiating if needed in accordance with your contracts,
if your contract allows that great.
That's what I think you should go with.
But being able to renegotiate, and this can happen in several ways.
So I've seen sometimes where it's Hey, there's we found this repair needed.
It's gonna cost $3,000.
We're requesting a $3,000 credit.
So maybe that's as a seller concession, or maybe that's a
reduction of the purchase price.
So I've seen that happen too, where it's a discount here as well.
And then sometimes what happens is the seller will actually
just do the repair work.
Maybe they hire someone else to do that, and they provide you with an invoice.
So there's several.
That this can be negotiated in here.
If you ask the seller to take on that work and repair things as needed, or give a
credit or discount on the purchase price.
And then to verify you're doing a final walkthrough normally before closing
to verify that work was done and, or getting an invoice for the work that
was done as well, to make sure that these things all happen before you
actually sign to purchase the home.
Cuz if you say, Hey we require these repairs needed.
You wanna have some way to validate the work that was done before you
actually end up purchasing the home.
So should you waive inspections?
A good inspection is going to high.
The bad, but again, it's not always reason for alarm a good
inspection is going to be thorough.
And so when you look at it, it's, the inspection report isn't gonna come back
and be like, this is such a nice house.
And it's so cozy.
It's going to tell you things that are wrong.
So understand that you're going to see things that are wrong with
a home new homes have problems.
And a lot of times there's just these little things that
are okay, that are just fun.
Little projects, Adam, to a weekend.
Don't fight over these small things.
Don't nickel and dime a seller.
I don't think that's the best way to move forward with the contract.
What you're really looking for, again, are these things that are gonna cost, a
thousand plus dollars, maybe your budget is a little bit bigger and maybe it's a
$5,000 plus items that you're looking for.
Also keep in mind, does your market require it?
And I put that in quotes because I hear a lot of people say this yeah, my market
requires this or contracts already have they don't have an inspection.
Contingency or anything like that.
If you're in a competitive market, you might feel like your market requires
you to waive an inspection contingency.
I'm telling you it doesn't require you too.
That might be the perception that might be what other people
are doing, but it doesn't mean that you have to do that as well.
Okay.
So just keep that in mind, just because of what other people are doing.
Doesn't mean you have to do it as well, just because your market's a
certain way does not mean that you have to make a bad decision just because.
Other people are doing that same thing also considering do you have the cash?
One to be able to do the inspections as thoroughly as you need to, but
then also, do you have the cash to make certain repairs in the future?
If you're already really tight on down payment and closing costs, are you
prepared to move forward on a home that is going to require significant
amount of repairs in the future?
So in my opinion, at most.
I would suggest if you need any sort of like leverage, maybe wave the repair
requests, but not the inspection itself.
So I would never suggest to not have an inspection.
I think you always need to have an inspection on home, right?
If you're going to purchase something, that's several hundred thousand
dollars that you're gonna take the obligation and responsibility for,
especially on a 30 year mortgage, why would you not have an inspection done?
okay.
I think you still need a contingency, but at most, okay.
Maybe wave the, that contingency wave the repair requests, but I, you still
need to have an inspection, I think, to understand what's going on there.
I really do think you need to have a contingency on the repair requests
as well, where you can renegotiate as needed or exit the contract
and get your earnest money back.
If you do find things that are in there, that's we're gonna
be too expensive for you.
And what I see a lot of people do as well is they'll put in their contract
that they have the opportunity to request repairs above a certain price.
So for instance, we request repairs above $5,000, anything less than
that as an individual item, you, as the buyer would be responsible for.
And so this is your way of telling the seller like, Hey,
we're not gonna nickel and dime.
For all these little things.
That can add a little bit of leverage to the contract.
We're only going to request things that we think are really big.
And so if the seller knows that, Hey, there's not these issues with the
home, then that might give them a little bit more comfort of having that
inspection contingency in there as well.
Okay.
So right over here is a video that YouTube said, Hey, I think you'd be
you might be interested in this.
So feel free to check that out to learn more about winning the house you love.