As we have seen in recent years here in the Lakes Region, when the need or demand for housing outpaces the supply of available listings, it presents a challenging and often frustrating road ahead for buyers. After touring countless properties and repeatedly losing hopeful bids against other competing offers, many buyers felt the need to up the ante, offering significantly over the asking price, or even waving home inspections, hoping to make their offer more attractive to a seller. Indeed, the highest bid often takes the cake. However, the second measure of waving home inspections can be a big, expensive mistake for a buyer: When a buyer chooses to pay over asking, they at least have a solid understanding of what their immediate housing costs will be. But if they wave inspection contingencies, they may inadvertently open a pandora's box of risk and uncertainty.
At a recent home inspection with Jon Bossey of ProSpect Property Inspections (www.prospections.com), I talked with Jon about the troubling trend of homebuyers waving home inspection contingencies in the purchase and sales agreement. He told me that in recent years, some buyers were opting for post-closing inspections instead, scheduled hours after receiving the keys to their new home. Any good home inspection will inevitably pick up on minor issues or needed repairs; even a brand new home will likely have a few problems to address or, at the very least, be aware of. However, in some unfortunate situations, a buyer would learn from the post-closing inspection report that the property had significant problems and latent defects. At that point, however, it's too late for negotiations: They already own the house, and now they have to deal with varying levels of buyer's remorse and unexpected expenses. While it is not a considerable financial cost to repair a gutter or to replace a single window if the seal has failed, replacing a failing septic system or a bad roof could be very costly. Similarly, a compromised house foundation, left unaddressed, can bring a cascade of repercussions, including serious safety risks and a significantly lowered home value. Improperly (i.e., unprofessionally) installed heating or electrical systems can also present a consequential safety risk, which can be very costly to remediate.