To avoid “buying a pig in a poke,” buyers have long demanded the
closing on a home purchase be contingent upon a satisfactory inspection
by a home inspection firm. In many parts of our country, we’re now
experiencing a strong sellers’ real estate market and sellers often
receive more than one purchase offer on the same day for their home. In
this environment, buyers are rethinking the home inspection
requirement. Is this a good idea?
To Inspect or Not To Inspect
Clearly, if a seller got two offers and one requires a home inspection
be done, most sellers will choose the non-inspection offer with all
other things being equal. So, a home inspection requirement can put you
at a competitive disadvantage. Still, are you willing to risk
purchasing a home that has some fundamental, expensive problems? What
if you purchase the home and subsequently learn plumbing under the
floors must replaced? What if the repair costs $10,0000?
One option may be to include a provision in your purchase offer that
provides for a home inspection done for informational purposes only.
That way, settlement under your offer is not conditioned upon the
inspection. It would not provide you with the option of amending the
contract to have the seller make repairs, nor would it provide a way
for you to void the contract should serious problems be uncovered.
Should serious problems be discovered, however, the seller is bound to
know the deal will be in jeopardy. For that reason, even an
“informational” home inspection won’t look as good to her as a contract
with no requirement for a home inspection.
Another option you might consider in lieu of a home inspection is a sub
rosa inspection. Instead of using James Bond for spying, you could ask
a friend working in the construction or engineering field to walk
through the house with you. The goal, of course, is to look for any
glaring “red flags” that are deal killers.
If your friend doesn’t see anything disturbing, you can then write a
clean contract offer without contingencies. Sellers love no contingency
sales. The chances are good that you’ll get the home you want, but
still have a some assurance there isn’t anything seriously wrong with
the property.
There is no one right answer when it comes to deciding on home
inspections. Each buyer has to ask himself how much risk he is willing
to take. If you are the only party making an offer, demand an
inspection. If you are one of many potential buyers, well, you are
going to have determine your comfort level. Others can provide
information, but the decision is yours.
