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Confusion on Home Inspections

With the highly competitive market we have experienced recently, and still see in most markets, many buyers have elected to wave or felt that they were forced to eliminate home inspections as part of their due diligence.  Buyers have frequently been told that the seller accepted another offer over theirs even when the offer price they conveyed was higher. Some buyers will particularly bristle when they hear that the seller declined their offer when they inserted the standard home inspection contingency. They will ask “What are they trying to hide?” Let’s sort this out so you can get a better sense of what is actually happening.
Here’s the rule of thumb. A seller is looking for the cleanest transaction they can get with the best price and terms obtainable.  Highest price is obviously important. But the fewest number of contingencies is also a serious consideration. If one agent has a buyer who is paying “full price cash with no home inspection” and another agent has a higher offer, subject to getting a mortgage, subject to the closing of another house, and they also have to do a home inspection before they are willing to give the transaction the green light, which offer do you think has the best chance of being accepted? The second offer may be higher but it has three major hurdles attached to it, and each one of these makes the offer less certain. Also, each one of these carries their own separate timelines and the seller has additional anxiety as they wait for each one of these shoes to drop. So should you just suck it up and wave the home inspection? Let’s offer you a more acceptable approach.
Ask yourself why you should have one? If you are new to buying Real Estate and you know little to nothing about how a house is built or what you should look for, it would be silly to not have a home inspector give you what would normally be considered a second opinion. If you are brand new, heck, this is your first opinion. But new or not, a home inspector charges a fee. If you need this expertise, this will add to what we call the cost of doing business. If you decide not to buy the property based on their findings, you still have to pay them. Please understand, this could actually be money extremely well spent too. BUT, by asking the seller to give you the latitude of letting you do the home and structuring the contract as conditional. you could be effectively taking yourself out of the running. Don’t despair. There is a magical solution.
You can still have a home inspection but how about putting the horse in front of the cart? My step daughter did just this and secured a wonderful property. She and her husband looked at a house when showings started at the Open House on a given Sunday. They loved it but wanted to proceed with caution. They knew that offers were going to be conveyed the following Wednesday at 5PM. They scheduled a home inspection for the next morning.  Monday the inspector goes in and by Tuesday evening they make the decision that the house will meet their requirements. They now have a good idea of what deferred maintenance they need to take into consideration over the next few years so they can work that into their budget. Wednesday they convey their offer and when they do, their offer is NOT subject to a home inspection. Why?  Because it is already done. They are not making their concerns the seller’s problem. Here is something else to think about here too. The seller would prefer this kind of offer because they know the buyer is really comfortable with their decision. By the way, that is the way people used to buy houses in what some agents call the “old days.”  Making the purchase, “subject to” is a relatively new phenomenon and seller’s have never been crazy about this.

The key is. you have to move quickly. You should always do your due diligence, and sometimes there is a cost involved.

OK, so what if you do the home inspection (and pay for it) and somebody else pays more and you don’t get the property.  Remember what we said previously: That is the cost of doing business. One new development on this is a smart business practice that some Home Inspectors provide. They will actually attend a showing with you and do a “Mini” inspection for a seriously reduced price. They will consider the “big ticket” items while you are looking at the house. These include HVAC, electric and the roof.  They will give you a credit and come back at a later date after you close, and do the full inspection and charge you the balance. Pretty smart and I have had several buyers do just that, and it worked out wonderfully for them. If you still insist that you want to make your purchase subject to the home inspection, at least compress the timeline. A seller would be foolhardy to agree to give you 7 days to get it done. 3 days should be more than sufficient. It is actually not unusual these days for agents to post in the public remarks on their listings that Home Inspections, if any, will be done in 3 days. To presume that any seller wants to effectively take their house off the market for a week, while you are cogitating and trying to sort things out in your own mind is unrealistic. 

Hope that offers a better perspective for you.

Oh….and GO BILLS!!!

Author Brendan J. Cunningham is a New York Licensed Associate Real Estate Broker, lead of the Platinum Team at HusVar Real Estate, as well as an accomplished writer, Shakespearean trained professional actor, and podcaster.

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