In recent years, as the residential real estate market has become highly competitive for buyers, some prospective homebuyers sweeten their offers by agreeing to waive inspection when buying a home. While this strategy may result in winning the war of offers, it significantly impacts the buyer’s post-sale legal rights regarding the condition of the property.
Most contracts to buy a home include a home inspection contingency clause. Under the provision, the buyer has a limited amount of time to arrange for an inspection of the property by a certified inspector. To waive inspection makes an offer more competitive and favorable for a seller, because there are fewer delays in the sale process and less chance of the sale falling through. But a buyer who waives inspection exposes themselves to significant risks.
Most contracts to buy a home include a home inspection contingency clause. Under the provision, the buyer has a limited amount of time to arrange for an inspection of the property by a certified inspector.
An inspection is a thorough examination of every part of the home, from the roof to the basement, and everything in between. The inspector checks comprehensively for issues like mold, radon, or damage to the foundation, as well as for hidden damage (like water damage) and the condition of the home’s systems and structure, including HVAC, plumbing, and electric. Some inspectors specialize in only certain areas. For example, when buying a home that has a pool, it might be necessary to hire an inspector that has experience inspecting pools. Oftentimes when a general inspector sees something that may require a specialist, the inspector will indicate in his or her report that the buyer should consider hiring someone to inspect a certain part of the property.
When an offer includes a home inspection contingency, the contract language establishes the buyer’s rights in the event the inspector finds damage or defects that affect the value of the property. The buyer may have the right to walk away and have the deposit returned or to negotiate with the seller for repairs or a reduction in the purchase price.
Waiving inspection makes an offer more competitive and favorable for a seller, because there are fewer delays in the sale process and less chance of the sale falling through. But a buyer who waives inspection exposes themselves to significant risks.
Although a seller usually must provide you with a list of known damage and defects, it’s not unusual for a seller to be completely unaware of major issues with their property. Waiving inspection can affect your ability to hold the seller legally responsible in the event you discover major, undisclosed problems after purchase. When you waive your right to inspect the property before closing the purchase, you may not be successful if you try to hold the seller legally liable, even if the seller made misrepresentations about the condition of the home.
There may be limited circumstances in which waiving inspection is an acceptable risk, but in many cases doing so can be a serious mistake with significant consequences.
In some situations, waiving the home inspection contingency may be part of a buying strategy. For example: If you are a real estate investor with substantial assets, you might have the flexibility to waive inspection and take the financial risks. If you are buying new construction that comes with either written or implied warranties, a home inspection clause may not be necessary.
Many homebuyers cannot afford the financial risks that result from waiving inspection. If you are buying a property, be certain you understand your financial exposure and the full implications of all the terms of your offer and purchase agreement.
There may be ways to protect yourself if the only way to get the home of your dreams is to waive the inspection contingency. But waiving the home inspection contingency does not mean you must waive your right inspection. You may waive the inspection contingency and still retain the right to have an inspector examine the property. Then, at least you will have the comfort of knowing the condition of the property before closing. However, if there are issues revealed in the inspection that make completing the sale untenable, your only option may be to walk away and perhaps lose your earnest deposit.
Alternatives to waiving inspection may be available to improve the appeal of your offer for the property, depending on the specific circumstances. But implementing a creative offer and protecting yourself legally at the same time requires special expertise and knowledge, as well as an understanding of the current market conditions and practices.
For most people, buying a home represents the largest investment of an entire lifetime. The best approach to purchasing a home — especially if you are buying your first home — is to talk with an experienced real estate attorney, like our accomplished lawyers at Sloan Law Firm.
If you are purchasing a home or other property, our real estate attorneys at Sloan Law Firm are here to make certain you protect your legal rights as you navigate through the entire process. We’ve been serving clients throughout Kansas and the Midwest since 1930. We invite you to contact us by calling (785) 357-6311 or using our online contact form.