Buying a home without an inspection is a risky move for homebuyers. Learn how to stay competitive without sacrificing a home inspection.
Buying a home without an inspection is technically possible, but it’s generally not a good idea. Home inspections can reveal property issues such as potential hazards, existing damage and aging infrastructure — all things you want to know about before you buy.
Why buying a home without an inspection is risky
You wouldn’t purchase a used vehicle before checking it for defects and wear and tear. For that matter, you wouldn’t even purchase a brand-new car without spending time driving it and making sure it’s the right fit for you.
Similarly, you want to learn everything you can about a house before you buy. Whether you plan to buy an existing or new construction home, it is important to have a professional inspector examine the property and give you a thorough report.
Without an inspection, you might end up buying a home only to discover after closing that it has glaring safety issues or major infrastructure that needs to be replaced urgently.
Unfortunately, when the real estate market was so competitive in 2020 and 2021, many homebuyers felt pressure to buy houses as quickly as possible, and some opted to waive the inspection. They may have done so to get to closing faster or to sweeten their offers to sellers. After all, a buyer who doesn’t require an inspection is less likely to back out of the deal due to a property issue or a conflict over necessary repairs.
But buying a home without an inspection can come back to haunt you — and it doesn’t guarantee that your offer will be accepted. If the house needs major renovation work, you will be on the hook for those costs as soon as you close on the property. But if you get an inspection, you can make an informed decision about whether to move forward with the purchase.
Plus, there are downsides to skipping the inspection for both buyers and sellers.
“There are many possible cons for the buyer, including later learning of hidden or undiscovered issues with the home, typically in areas not visible during showings or not readily seen,” says Ryan Bowman, a REALTOR® and associate broker with eXp Realty in Kent, Ohio. “You can discover issues with foundations, attic areas, septic or wall systems, sewage lines to the street — the list goes on and on.”
Bowman shared a cautionary tale for sellers as well. He related the story of a client, anonymously named “Bob,” who waived his inspection contingency. Later, after Bob attempted to sell the home, the new buyer had an inspection done that revealed issues with the garage foundation, which cost Bob thousands of dollars to repair.
“If an issue is discovered after closing, the buyer’s first thought is always, ‘The seller knew about it,’” Bowman says. “If the issue is large enough, the buyer may pursue a lawsuit against the seller. This could most likely have been avoided if a thorough inspection was completed.”
When buying a home without an inspection makes sense
Mortgage lenders don’t require a home inspection before you can close on your loan (although they do require an appraisal). That means that getting a home inspection is entirely up to you. And although it’s generally not advisable, there are buyers who have found that waiving the home inspection contingency in their contracts works to their advantage.
“As a homebuyer, I waived the professional home inspection to expedite the process of closing the contract,” says Nick Schiera, a homeowner in West Windsor, New Jersey. “Most sellers want to sell their homes as-is and desire a fast and no-hassle transaction. Therefore, I could easily get the deal and provide an offer that would entice them to sign the contract.”
In a competitive market, buyers like Schiera may be less likely to lose out on the house. Declining an inspection can give you a leg up over rival buyers.
Ryan Hawker, the owner of H3 HomeBuyers, a home-flipping company based out of Xenia, Ohio, agrees.
“I have chosen to waive a professional inspection due to seller time constraints and the cost of the property,” he says. “If the property is well below market value and I believe I can fix it up and get it back on the market with a 10% to 20% profit margin, I will purchase it with no inspection. I can get a better deal with no inspection and get the property more quickly.”
What is a home inspection contingency?
In a real estate purchase contract, the buyer and seller can add contingencies as they see fit. A contingency is a clause or specification indicating a requirement that must be fulfilled or action to be done or not done for the agreement to be legally binding. For that to happen, the seller and the buyer must each consent to each contingency’s terms and sign the agreement.
Buyers commonly include several contingencies in a home purchase agreement, including an appraisal contingency, financing contingency, title contingency, closing contingency, and home inspection contingency. The latter specifies that the purchaser has a finite length of time to have the home inspected by a professional. With this contingency in place, the buyer can back out of the deal without losing their earnest money deposit if the inspection reveals issues that cause them to no longer want the house.
“As part of the process of buying real estate, you have a due diligence period, also known as a ‘right to inspect’ period, which is a contingency you can put in the contract,” explains Eric Klein, a real estate attorney in Boca Raton, Florida. “Generally, it’s about seven to 14 days from the contract signing for the buyer to complete their due diligence or inspection. In the event the buyer is not satisfied with the inspection, no matter how small the problem may be, the buyer has the option to void the transaction, reclaim their deposit, and walk away with no further obligation.”
If you waive the home inspection contingency, you can still have the home inspected before you buy. But you won’t be able to use the findings to negotiate the price or repairs with the seller.
Klein says he always encourages his clients to complete a home inspection.
“It could be the difference between loving your new home or losing it in a foreclosure because you cannot afford to make repairs that an inspection might otherwise uncover,” he says.
If you are attempting to purchase a home in a hot market, there are ways to stay competitive without waiving the home inspection contingency. For instance, you can agree to only back out if the inspection reveals major problems, as opposed to minor cosmetic issues that don’t affect the property’s safety and livability.
Bowman suggests including a clause in the contract that states you will not ask for any concessions or repairs for items deemed to be less than a particular amount, such as $5,000.
“This demonstrates to the seller that you are determined to do your due diligence, and it gives you the ability to walk away if you choose to. I’ve had lots of success using this strategy, even in a competitive market,” he says.
Hawker advises only passing on an inspection if the cost of the property is well below market value, you have the skills and resources necessary to make needed improvements, and you can put down enough money to immediately earn sizable equity in the property.
The bottom line on buying a home without an inspection
It’s better to lose out on a home after an inspection than to purchase a house that could cost you thousands more to repair because you didn’t have an inspection completed, Hawker says.
“A home inspection contingency should not scare a seller if their property is in good condition,” he adds.
Ultimately, it’s up to you whether to buy a house without an inspection. But as a general rule of thumb, buying a home without an inspection can create real risks and financial challenges. You’re likely better off getting a home inspection but negotiating on the terms of the contingency with the sellers or bolstering your offer in other ways.
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