A good friend of mine, Meka from Penny Smart Girl, asked me this question today:
“Question, I see a lot of buyers saying that they “waived inspection, etc” how is that possible to waive? I wouldn’t think lenders would allow that?”
It’s a great question and very relevant in this competitive market.
Right now, the sellers are calling all the shots. Homes are receiving multiple offers, selling for an average of 105% of list price and in record short days. It is a tough environment to be a buyer in. Many buyers are taking drastic measures to try to get the seller to choose their offer. One of the craziest things that buyers are doing are waving inspections.
An inspection is where you have a trained and licensed inspector come and examine the structure and working parts of a home. It is the best way to really get a good understanding of the condition of the home and what items need to be repaired, replaced or maintained. Without a full inspection, you don’t really know what you are getting into.
I would highly DISCOURAGE any of my clients from waiving the inspection. It would be like going to Amazon.com to buy a new car and just ordering an SUV without knowing what make, model, year or color it was. You would never order a car sight-unseen off the internet and you should never buy a house without a proper inspection.
Then WHY are buyers doing it? The bottom line is as a buyer, you want to present the strongest and best offer to the seller. The seller is most concerned with selling for top dollar and having the fewest possible ways for the deal to fall through. By waving inspection, you are eliminating one of the major contingencies than can cause a sale to fall apart. The less contingencies, the better the chance is that the seller can get the house sold.
What most of my clients do is to do a pre-inspection. This is where you hire and (unfortunately) pay for the complete inspection of the house before you even submit your offer. When you submit your offer, you indicate you have completed an inspection and are accepting the house as-is. Although you are not able to negotiate for repairs when you do this, you are at least aware of the condition of the property, and the seller is set at ease because it is one less possible thing that can halt the sale. When I represent sellers, I counsel them that an offer with a pre-inspection is a better offer than one that just waived the inspection. When a buyer does a pre-inspection, it shows they are serious about buying the home, know what they are getting into, and are ready to move forward. A pre-inspection is a win for all parties involved.
In regards to the last part of the question, the lender is never privy to the inspection unless you submit an inspection response form asking for repairs or concessions. The lender conducts an appraisal, and determines the condition and value of the home that way. The inspection is solely for the soon-to-be homeowner.
To wrap this all up, even though we are in a tough market, it is SO important to have an inspection, even if it is before you submit your offer, so you know the overall condition of your new home.