No Contingency Offer? Skipping the Home Inspection is a Bad Idea!

The overheated housing market in our area is leading to bidding wars and atypical concessions—with buyers voluntarily removing the inspection contingency from the purchasing agreement.

Reason #1: “It will make the offer more attractive!”

Not necessarily. If the seller has a good, honestly represented property, then the inspection of it should not be a big deal.  If it is, there is likely some level of dishonesty or misrepresentation involved. Keep in mind that most lenders are double tasking their FHA and VA appraisers in this environment to report on significant defects during their valuation site visits. The erstwhile mortgagee—the applicant paying for the appraisal on the lender’s behalf—may be foolish, but their bank will not be.  If there is an obviously serious defect, it is going to jeopardize financing.

Reason #2: “It will not make a difference because the seller will make no repairs.”

“As is” does not make significant defects or safety concerns magically evaporate. The local building code enforcement officials, utility companies, insurers, and others all have a stake, and in some cases, jurisdictional authority, to compel compliance with building codes, fire safety, sanitation, and other requirements. Being informed keeps these problems from being transferred to a new, unaware owner. Going back to financing, banks will sometimes insist on required repairs being made as a precondition for closing. 

Reason #3: “There’s obviously nothing wrong with this house, so why pay for an inspection?”

This logic is penny wise and dollar foolish—besides, even if true, isn’t knowing more about the material condition of your new home and its expensive systems worth a few hundred dollars? Almost all buyers are probably paying more for a “broker’s flat fee”—which brings no value whatsoever to the transaction and is in addition to the thousands already paid in sales commissions. Want to save money, challenge the addition of this, and other, superfluous or egregiously overpriced fees. Skipping the inspection will cost potentially thousands more in undisclosed defects and required repairs.