Pros & Cons of Waiving Home Inspections | San Francisco Real Estate Podcast
What are the pros and cons of waiving the inspection contingency?
Why would I waive my home inspections when buying a property?
As of June 2018, the San Francisco real estate market is a complete seller's market. What is a seller's market? A seller's market means that the demand for homes outweighs the housing supply. In other words, more people want to buy homes than there are homes to sell. What are the affects of a seller's market? Multiple buyers place bids on properties and home prices tend to rise quickly.
Buyers sometimes will get buyer fatigue in which they have been beaten out on multiple properties, multiple times and will look for ways to strengthen their offer.
One way to strengthen an offer is to remove all of the buyer inspection contingencies.
What are the advantages of removing the buyer inspection contingency?
Sellers tend to feel more confident in taking their property off of the market if a buyer does not need to do inspections. By having an inspection contingency in place, buyers have the right to back out, for just about any reason. A buyer could back out because they don't like the color of the flooring, or there is a small drip in the faucet. Sellers feel like they would loose all of the marketing momentum if a buyer backed out due to inspections.
The biggest advantage to writing an offer with no inspection contingency is that your terms will look really good to a seller, knowing you will not be asking for any credits or repairs. You are taking the property as-is.
What are the disadvantages to writing an offer with no inspection contingency?
Have you seen the Tom Hanks movie Money Pit? This should speak for itself. This is not a joking matter. Properties can look nice from the outside, but can be money pits on the inside.
What if I don't feel comfortable writing a non-contingent offer, what should I do?
Writing an offer with no inspection contingency should be done if and only if you are 100% comfortable and confident in doing so. This is not for everybody. If you feel the need to do a property inspection and seek outside advice from a contractor, designer, architect, etc then write in a short inspection contingency to make sure you have enough time to get the answers you are looking for.
My real estate agent said that writing a non-contingent offer is the only way to get my offer accepted. True?
Not true. All of the terms in a purchase agreement are negotiable. Don't let anybody try to tell you that they're not. As a buyer, you need to feel comfortable in the decisions that you make. If you are not comfortable, then maybe take pass.