Are You Paying the Price for Skipping a Home Inspection?
Under the weight of a fiercely competitive housing market, this blog post unpacks the critical risks associated with skipping home inspections. Navigating the legal ramifications and practical implications, we delve into why a home inspection is a non-negotiable step in the home buying process. Through real-life examples, expert opinions, and actionable advice, we highlight the importance of thorough inspections for both buyers and sellers.
Three main takeaways:
The Legal Risks of Skipping Home Inspections
The Benefits of Pre-Listing Inspections
The Misconception of Quick Sales Without Inspections
Is waiving a home inspection a savvy shortcut or a perilous gamble? Join us as we explore the necessity of home inspections in today’s real estate market—what insights will you uncover?
Where the dream of homeownership seems increasingly out of reach for many, a recent Buzzfeed article captured 25 critical issues that today’s homebuyers are grappling with, from skyrocketing home prices and bidding wars to hidden property defects and waived inspections.
This blog series aims to take a deep dive into each of these 25 Buzzfeed issues. We’ll explore every facet of the current market conditions. Each post in the series will tackle one specific concern, providing insights, expert analysis, and practical advice to help you navigate the complexities of buying a home in today’s economic environment.
Whether you are a first-time buyer, a seasoned investor, or simply curious about the state of real estate, this series will provide perspective to help you make informed decisions.
With some of these widespread concerns laid out, let’s dive directly into one of the Buzzfeeed voices:
“The market decided to delay my search for me. The cutthroat market and the fact that wanting an inspection will likely cost you the house — because the seller will just go with someone who is willing to not do an inspection — mean no house for me. Why would anyone risk buying a home without an inspection blows my mind.” —winterwednesday9
Why anyone would risk selling a house without an inspection blows my mind. I’ll preface this: I’m in no way an attorney and not the person to be taking legal advice from; however, not having a home inspection opens you up for lawsuits.
Buyers can sue if they discover a defect that wasn’t obvious at the time of purchase and was hidden or lied about by the seller or their agent. For the buyer to sue they must prove that
- The defect wasn’t visible during the sale.
- The seller or agent failed to disclose or lied about the defect.
- They relied on these lies or nondisclosures in their purchase decision.
- They incurred actual monetary damage as a result.
Cinch, a home warranty service, surveyed 494 homebuyers and 476 sellers, and discovered some shocking revelations. 74% of sellers admitted to concealing issues with shoddy repairs, and 81% of sellers also admitted to actions they believed other people would consider unethical. Then, of course, the buyers discovered those issues after they purchased the house, after they had the keys and the deal was done.
Infographics blatantly stolen from Cinch.
The Rise in Real Estate Lawsuits
According to Mary Boone of Real Estate News, each year, over 40 million lawsuits are filed in the U.S., with an increasing number targeting real estate agents and brokers. From 2021 to 2022 we saw a 9% rise in real estate lawsuits.
“It’s real,” says Matt Alegi, head of the real estate law department at Shulman Rogers. “I’ve seen firsthand the increase in my caseload.” Alegi attributes this rise partly to the hot market, where buyers often skipped inspections to secure homes quickly, writes Boone. “People feel they overpaid, and when issues arise, they’re upset and seek compensation,” Alegi explains.
Benefits of Pre-Listing Inspections
Home inspections offer documented proof of the property’s state at the time of sale. A pre-listing inspection conducted by the seller demonstrates good faith and a commitment to transparency. This proactive approach deters buyers from pursuing legal action later, as the inspection shows the seller made an effort to disclose all relevant information. When buyers are fully informed about a property’s condition, they are less likely to feel misled or deceived, which is a common cause of litigation.
Moreover, home inspections can reveal hidden defects that might not be apparent during a casual walkthrough. Issues like structural damage, faulty wiring, or plumbing problems can be costly and dangerous if left unaddressed. Discovering these issues before you put your home up for sale helps accurately price the property. You either sell as is, or you make the repair investment to earn a higher asking price.
Uninformed sellers do appreciate waived home inspections because the sale of the house occurs much quicker. Sellers get to bypass the need for making repairs that the inspection would reveal. Additionally, not having a home inspection seemingly, on the surface, mitigates risk to the deal falling apart.
Misconception of Quick Sales
For example, the very first house I ever showed, had fifteen layers of asphalt shingling on the roof. Stacking shingles like that is a recipe for disaster. Just two shingle layers make the roof prone to leaks, rot, and algae growth, mold, and expensive repairs. A single layer of shingles weighs about four pounds per square foot. Fifteen layers is about sixty pounds per square foot. Typical rafters and trusses are not designed for that kind of weight, and the entire roof was under threat of collapse. Being a complete noob in the real estate industry, I did not notice the roof, but the home inspector did, and the buyers backed out of the purchase.
Without an inspection, the buyer has less leverage to negotiate price and less ability to escape the purchase and sales contract.
Success Stories with Pre-Listing Inspections
Every house I’ve ever sold with a pre-listing inspection has resulted in zero negotiations from the buyer. No one asked for a price reduction for the bad condition because we clearly informed everyone about the roof beforehand. Boom and finished, no arguments, let’s get to the closing table.
I realize, WinterWednesday9, that this does not answer your concern.
In a hot market, buyers might think waiving the home inspection contingency provides them with an advantage in a multiple offer situation. But if you purchased the house with fifteen layers of roofing, what kind of advantage did you actually have as the buyer? Really, you were just duped.
WinterWednesday9, you are right! Why anyone would risk buying a home without an inspection blows my mind too.
When you sign an exclusive buyer’s agreement contract with a Realtor, the Realtor agrees to be your fiduciary, to act in your very best interest. A home inspection shouldn’t be a deterrent to buying a house because your Realtor should be able to negotiate that point with the seller’s agent successfully. Are you still going to lose out on some houses? Yes. Is the process going to potentially take longer? Yes.
When I first started out as a Realtor, I had no experience, right? But I had negotiation skills, and I knew I had negotiation skills because when I joined the SEA Adjunct Union for the Community College System of New Hampshire, I discovered the reason why we hadn’t had a pay raise for three years was that negotiations between the union and the administration stalled. By stalled, I mean people yelled and screamed at each other within the SEA, and cuss words were hurled at the administration. The administration plainly stopped talking to us, giving us silent treatment. hard lines were drawn in the sand everywhere.
In that first contract negotiation I attended, people argued over grammar in the contract language (which I know is important to the law) but we are talking about the difference between including commas around a dependent clause or not including commas around a dependent clause when whether you kept the commas or not, had zero effect on the meaning of the sentence. It was just something to argue about that didn’t have high stakes. In the second negotiation that I actually became a vital player, I told the lead negotiators that the last thing I wanted to do was to talk about the contract. Instead, I wanted to have a conversation. I used the word “charrette,” and everyone looked at me sideways. I stole the concept from the 2019 film Best of Enemies. It was a crazy idea to just talk and listen to everyone, and it was an uphill battle to get anyone to agree to this.
But after this charette strategy, after three months of just listening to each other, we passed a provisional one-year contract with a small bump in pay as a sign of good faith to return to the negotiating table in a year (we were waiting for the state to finalize the higher education budget). When we came back to the table, I had stepped down from the president position of the union. I did say a word to the new prez, who was cantankerous and verbally abusive and a her-way-or-the-highway type of person—that’s the person I left in charge. The union asked if I was sure about giving up my position—and you know what? The new prez asked the administration to have another charrette conversation. We ratified a contract within two weeks. We received a significant raise—still not enough to make a living wage, but considering what we were making, it was considerable. One of the huge sticking points for me was that whenever we started a new semester, we were treated like brand new employees and waited up to four weeks or more for a paycheck. That changed. Quitting teaching, I will not see the benefits of that change, but the negotiation made a huge difference in the lives of 75% of all instructors across seven colleges. I’m proud of that moment, and I knew I could negotiate coming into real estate.
A Key Question
This should be one of your major questions when interviewing a real estate agent: what is your plan for finding a house in this market? How are you going to ensure I have a home inspection?
A competent real estate agent will not only respect your need for a thorough home inspection but will also have the negotiation skills to make the inspection happen without sacrificing your chances of securing a home. In the end, a home inspection is a crucial step that protects your investment and peace of mind. Don’t let the frenzy of the market pressure you into skipping this vital process. Trust a Realtor who prioritizes your long-term wellbeing over a quick sale.
