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You may be tempted to waive a home inspection to get your offer accepted. Read on to see why that’s a dangerous move.
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When you buy a home, you run the risk of encountering a major repair issue right after you close on that purchase. You can lower the risk of that happening by working a home inspection contingency clause into your purchase contract.
Home inspections are a common part of the closing process. But you may be tempted to waive a home inspection to give yourself an edge over other buyers in a tight market. Doing so, however, could sorely backfire on you.
The problem with waiving a home inspection
When you make an offer on a home and a seller accepts, you generally put down a deposit known as earnest money that lets your seller know that you’re serious about the purchase at hand. That earnest money goes into an escrow account and is held there until your home purchase is complete.
Meanwhile, it’s common for home contracts to include a home inspection contingency. This clause gives you, as a buyer, the right to back out of your home purchase contract and get your earnest money back if issues are discovered with the home and the seller refuses or is otherwise unable to address them.
When you waive a home inspection contingency, you give up the right to back out of a home purchase when problems with the property are discovered. And that could mean giving up your earnest money deposit.
Why do some buyers waive their right to a home inspection?
Many home buyers waived their right to a home inspection in 2021 when mortgage rates sunk to record lows and demand was intense. Back then, it was common for sellers to get multiple offers on their homes, and waiving a home inspection contingency could give the buyer doing so an edge over the competition.
But these days, demand isn’t what it was in 2021. That’s because it’s a lot more expensive to sign a mortgage loan now than it was a couple of years ago. As such, you really shouldn’t feel compelled to give up your right to a home inspection when that inspection could spare you from buying a home with hidden problems.
You may also be tempted to waive your home inspection contingency because you don’t want to bear the cost of an inspection. But that’s really not the best reason to go this route.
Rocket Mortgage says that the average home inspection costs $300 to $450, though some can cost more, depending on the property in question. However, if a home inspection uncovers an issue that will cost $10,000 to address, and your seller either shaves that amount off of your home’s purchase price or fixes the issue, your $300 to $450 fee will more than pay for itself.
As such, it’s really best not to waive a home inspection contingency when buying a home. It’s important to know what you’re getting into as a buyer, and you’ll want an option for backing out if the condition of the home you’re looking to buy isn’t what you think it is.
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