Risks of Skipping a Home Inspection
Thinking of skipping a home inspection? You may have a better chance of sealing the deal, but there are significant risks involved.
The housing market is red-hot right now, sparking a trend among home buyers to skip home inspections to nab their dream home ahead of other offers.
“We are seeing this in nearly all of the markets we serve — with low inventory, buyers want to secure the home of their dreams,” says Joe Tangradi, vice president of technical services for HouseMaster. “Skipping an inspection seems like a way to expedite the sale.”
Real estate insiders acknowledge this “new normal” fueled by the highly competitive state of the market. Compass broker associate and attorney Carol Solfanelli sees it in San Francisco, where she works. “If a buyer has an inspection contingency in a multiple offer situation, 99 percent of the time, this buyer will not prevail,” she says.
Although you may be tempted to opt out of a home inspection to close on the house your eyes (and wallet) are set on, you’d be hard-pressed to find an expert who agrees.
“People are literally negotiating away home inspection contingencies on the street,” says Tom Kraeutler, The Money Pit podcast host and 20-year veteran of the home inspection industry. “But buyers are really playing with fire. It’s very risky because there’s an awful lot you don’t know about that house.”
Reuben Saltzman, a licensed home inspector and president of Structure Tech Home Inspections, agrees. “My advice is to never, ever skip the home inspection,” he says.
Before you make an offer on an uninspected house, make sure you’ve carefully considered what negotiating away a home inspection contingency is costing you and how you might mitigate the risks. Here is an overview of the risks associated with foregoing an inspection, and some alternative solutions to avoid a severe case of buyer’s remorse.
The Hidden Costs of Skipping a Home Inspection
As with any major purchase, buying a home requires a significant amount of due diligence to protect your interests and make an informed decision. A thorough, professional home inspection is a fundamental piece of the information puzzle. It’s nearly impossible to gain a complete and accurate overview of the home without it.
Here are a few of the main issues you may not learn about when you waive your right to a home inspection:
Unknown safety hazards
Without a home inspection, you may not learn about pressing safety issues that should addressed before closing. “Home inspections take several hours to conduct, and many safety issues will only be identified in the course of a normal home inspection,” Saltzman says. “This includes concerns such as electrical hazards, fire hazards and carbon monoxide hazards.”
Kraeutler remembers an inspection where he found an animal nest blocking the chimney on the roof. The current occupant attributed her constant nausea to her pregnancy. It turned out she was being slowly poisoned by carbon monoxide pumping through her home’s heating ducts.
“There have been many instances in my career when I have found major safety problems in a house,” says Kraeutler. “I can’t tell you how many times I’ve gone in for an inspection and there was a new furnace being rolled into the house before I was done, because I had found a situation that was so dangerous that it had to be taken care of immediately.”
Need for expensive repairs or replacements
You may think that major structural or maintenance issues requiring extensive (and expensive) work would jump out at you. But according to Saltzman, “Most of our larger, more serious home inspection findings are a surprise to the buyer.”
Many problems that might give a home buyer pause are hidden by nature or by design, and it takes an experienced home inspector to suss them out. Solfanelli has a laundry list of deal-breaking problems that have come to light during home inspections, from leaks painted over to brick foundations potentially costing more than $100,000 to replace.
“Home inspection is a forensic analysis and it takes years to develop these skills,” Kraeutler says. “If you have a professional who has carried out a lot of home inspections, you’re going to get information you wouldn’t get any other way. It’s not only knowing how houses are built, but also knowing how they fall apart.”
These discoveries are crucial to discovering a house’s true condition and deciding whether or not any major repairs or replacements are worth the investment.
No maintenance plan for the home
“Unlike vehicles, homes don’t come with a maintenance manual,” says Saltzman. “When you get a home inspection, you’re not just getting a professional honey-do list. Home inspectors also give advice about the future maintenance needs of a home to help make sure the new owners are well-educated. Because, after all, not everyone reads Family Handyman.”
Knowing what big jobs may be coming in the next five to 10 years makes it easier to create a financial plan and be ready for them, like roof repairs or replacement, or a new furnace. “Sometimes telling home buyers when to expect a repair is almost as valuable as finding major defects, as it allows you to budget,” says Kraeutler.
Tagredi agrees. “A home inspection provides a home buyer with the information they need to consider in the overall home purchase equation,” Tagredi says. “For example, a home that is selling at a lower price but will require major repairs in years shortly after the buyer’s move in may not be the right house for them. A better option may be to pay a bit more for a home with updated systems and elements.”
Home Inspection as a Bargaining Chip
Besides offering a potential home buyer valuable insights into the true condition of a home, a home inspection can also figure heavily into negotiating the final selling price and other related costs. The caveat, of course, is the bargaining value of an inspection decreases significantly in a competitive real estate market where there may be multiple offers on the table.
When given the option between a bid contingent on a home inspection and a bid that isn’t, most sellers will snap up the latter. The main consequences of forgoing an inspection for your real estate negotiations are:
One less bargaining tool. You can leverage inspection results during negotiations for the selling price and/or closing costs, justifying a lower offer with defects uncovered during an inspection. With no inspection in hand, you give up what can sometimes be an important bargaining chip.
Surrendering a legal contractual out. Home inspection results that turn up major issues offer a way to legally back out of a contract that includes a contingency clause, taking your earnest money deposit with you. Without an inspection, you are essentially buying the house “as-is” with fewer ways to walk away if things turn sour.
To reap some of the benefits of a home inspection when dealing with a seller who is reluctant to grant one, Saltzman suggests a compromise.
“Consider making an offer that is still contingent upon a home inspection, but make it clear that no negotiations will take place after the home inspection,” Saltzman says. “For the purposes of the real estate transaction, the home inspection will only be used to help the buyer make sure that there are no huge issues that they can’t get over.” This way, you can still back out if deal-breaking issues come to light.
Home Inspection a Non-Starter? What You Can Do Instead
If you absolutely must negotiate away a home inspection contingency, there are some ways to mitigate your risk as a home buyer that do provide limited insight into the true state of the property.
Ask to see any recent inspections done on the property. “The only time a buyer I represent would consider foregoing a property inspection (which I do not recommend) would be if a seller has done their own contractor and pest inspections with contractors I know who are reputable,” says Solfanelli. “As long as inspections have been performed which highlight the risks, the buyer has at least been informed.”
Schedule a walk-through. “Many home inspectors are willing to charge a flat rate for these walk-through consultations, also called walk-n-talks,” explains Saltzman. “These consultations are done during showings, where the home inspector shares their professional observations with the potential home buyer.” He warns, however, that walk-throughs are not home inspections and will not reveal defects that a full inspection would. “We don’t use any tools other than a flashlight, and our time in the home is very limited,” Saltzman says.
Have a savvy friend take a look. If you have a friend or relative who is knowledgeable about construction, ask them to give the house a once-over. Keep in mind, however, that as much as a person may “study up” to spot red flags, nothing can match the experience of a licensed home inspector. “You may have a handy uncle or aunt who really knows their stuff,” Kraeutler says. “But it takes years and hundreds of home inspections to be able to notice problems an experienced inspector routinely finds.”
You’ve Bought a Home Without an Inspection. Now What?
You may have already purchased your home, but that doesn’t mean it’s too late to have it inspected.
“It’s still wise to have a home inspection after you’ve closed on the home,” says Saltzman. “It’s critically important for all homeowners to be aware of safety and maintenance issues in the home, especially now that they own it. For this reason, the number of home maintenance inspections that we do for existing homeowners continues to increase every year.
“An ounce of prevention is worth a pound of cure, and maintenance inspections show homeowners where to find that ounce.”