Are you part of the 19% of home buyers that are waiving inspections? We would like to speak directly to this audience in The Triangle. As a buyer of an existing home or a new construction property, a home inspection is critical to protecting your interests. We know buyers are burnt out and sellers are not going to likely consider any inspection related requests for consideration and that buyers are currently forced to accept this or lose many tens of thousands of dollars should they decide to terminate their offer due to what they've learned from a quality home inspection, we still believe there's never a good reason time to forgo home inspections, even if it's just for your informational purposes.
What is the risk of forgoing inspections on Existing Homes?
Inspections play a critical role in protecting your investment. A proper home inspection is absolutely critical in terms of understanding how the property was constructed and identifying both significant defects requiring immediate attention as well as less immediate "deferred maintenance" issues that should be addressed over time for the long-term benefit of the home owners and as a way of insuring the properties value. In a market where buyers have inventory to choose from waiving inspections presents a huge risk and no buyer in their right mind would agree to do so. In our current market, buyers need to understand that regardless of whether or not they specifically state that they are buying the property "As-Is" this is exactly what they need to be prepared for. To start the standard forms we use prepared and approved by the North Carolina Real Estate Commission and North Carolina Bar Association are (and have been for many years) As-Is contracts. The Seller is not under any obligation to address any issues that inspections may uncover. With Due Diligence fees averaging between $40,000 - $100,000 in non refundable money paid directly to the seller, the likelihood of a seller agreeing to address inspections issues is unlikely. Many Sellers would be thrilled to have the buyer walk away so that they could keep this money and use a portion of it to make any major repairs and then put it back on the market. As we suggested in our last blog, besides needing room to be able to offer above list price in a competitive offer situation, you will want to have a through understanding of what you're looking at in terms of repairs and maintenance in the near term; and money set aside to address these issues.
Right now, the existing home supply is severely constricted in The Triangle. Sellers are hoping to take advantage of more increases in prices, and buyers have motivation to buy now as mortgage rates keep going up, and are projected to do so over the coming year. While it may be necessary to make an "As-Is" offer, actually forgoing inspections is in our opinion an extremely poor choice. The Brokers at My NC Homes have extensive experience with residential construction. We are able to advise our buyers when showing them a home of"Red Flags" we note; in terms of major expenses that they can expect in the near term, but we aren't trained inspectors and aren't there to thoroughly examine, plumbing, electrical, heating and cooling systems etc. This is why we strongly encourage our clients to have a quality home inspection. We understand that a home can really look great, yet still have issues relating to foundations and the structure.
Unknown Risks of Forgoing Inspection New Construction
But what about a new house? New Construction properties also need inspections. Do not rely on guarantees or warranties by new builders. Builders have been under extreme pressure due to lack of supply and lack of labor. They are hiring with looser standards and trying to stretch materials that have been short in the supply chain. It is common for a builder to tell you that the homes pass inspections, but county inspections use completely different criteria than home inspectors. Sadly most county inspectors are commonly overworked, undertrained and underpaid. In addition they are only there to hopefully confirm that the builder is meeting minimum building codes and nothing else. Do you want to risk your future and assume a financial burden, based on a public inspection? In fact we believe the money spent on getting a through home inspection on new construction is money that's very well spent as new construction is the only time that it's appropriate to simply turn over the inspection deficiency list and say "Fix it all" and in our experience it's the rare builder that will push back.
When to forgo an inspection?
We never want to say never, but ordinarily, you would want all property inspected as part of the buying process. There are reasons beyond protecting your investment, you are also protecting yourself legally. You would not want to be held liable for an accident on your property. One instance when you could forgo an inspection is if you are planning on demolishing a building or have no expectation of a place being habitable. Even in this instance, you would want a survey.
A final word regarding inspections; just as all Realtors don't bring the same level of experience, integrity, professionalism to the table, the same is true with home inspectors. Quite honestly our experience over many decades is that most inspectors do a lousy job of actually identify problems. For more on this subject check out our Blog below on Home Inspections, The Good, The Bad and The Ugly.
We hope you were convinced to keep insisting on home inspections in home buying. This is not something you want to skip. While in the moment of imagining yourself in a new home, imagine also the worst-case scenarios of a home that has plumbing, electric and foundational issues. Your dream house quickly becomes a nightmare. Are you looking and frustrated by the options? Let us help. We have decades of experience with buyers in The Triangle and we would love to help.
Posted by Larry Tollen on
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