We live in crazy times…
At the time of this writing the real estate market is as crazy as I have ever seen it. Buyers are offering many thousands of dollars over asking price and still not getting the home. When the market gets this way, buyers and buyers agents look for ways to make their offer stand out from the rest by removing certain contingencies. During the real estate transaction there are a few standard items that are used during due diligence to make sure the home is the right fit for the buyer or that there is not something major wrong with the home whether that be with the structure or with the perceived value of the home.
Standard contingencies include:
- Appraisal This is used to make sure the property appraises high enough to justify the purchase price.
- Inspection This is used to go over the home to make sure the home does not have any major defects that the buyers don’t feel comfortable with or able to repair.
- Environmental Testing This contingency handles things like Radon testing, Mold testing and other types of testing that may become necessary after an inspection is performed.
- Financing This contingency is in place to allow the buyers out of the contract in the event they are unable to obtain financing.
There are other contingencies but these are the most widely used in Wisconsin.
Foregoing the inspection contingency is probably the most common way to make your offer look better. I must say I was guilty of this myself this spring. Although I do a cursory inspection when I initially look at the homes and I like to think I know what to look for. For most people this can be ultra dangerous. I lucked out, but you may not be so lucky. Here are my top 5 reasons to not skip the home inspection:
- Major defects The inspector many times finds major issues with not only the structure but also the HVAC, Electrical, or plumbing systems. Some of these repairs can cost thousands of dollars.
- Safety Concerns On a regular basis I find issues that are safety concerns, there are many older building products that are major safety issues that unless trained most people would just not realize the hazard.
- Future costly repair items On a regular basis We do come across items that are functional but will need to be replaced in the near future. Many HVAC system installations can cost over $7000 and if you haven’t budgeted for that it can come as a shock to your system.
- Negotiations I know in this market many sellers will not give concessions since there is such demand but another good reason to have the home inspection is to be able to negotiate repairs with the sellers. This should be limited to major items and not nit picky little things, however.
- Insurability We also come across several common installations that may effect the ability to obtain homeowners insurance. It would not be a good day if you purchased a home only to find out you cannot insure it without spending 10’s of thousands of dollars on costly repairs.
There are hundreds of other reasons to not skip the home inspection but these stick out to me. Many of our clients state to us that they were told that the sellers are not fixing anything but they wanted to get the inspection to be sure of what they are purchasing as well as use the inspection as a sort of to-do list. And that is a great reason to use this service.
We strive to give as much information as possible on each home we inspect, we also have relationships with many service providers that offer our clients discounts on every day products. This helps offset the inspection cost, but the real value is in knowing what you are buying.
One last thing, I have been hearing that some buyers agents are telling buyers to waive the inspection since they cannot negotiate the inspection items in this market. If your agent suggests that to you, it may be time to look for a different agent to represent you. That is not only unethical it is shady. Be smart, know what you are buying, get an inspection! Nice sales pitch huh? I digress.
As always, I hope you have taken some value from this post. If you have a suggestion for a maintenance topic please submit them to my email below.
-AZ
Aaron M. Zuehlke is the owner and inspector at Zuehlke Inspection Service, LLC, a full-service home inspection company serving Southern Wisconsin. Specializing in Home inspection, Radon Testing, Mold Testing/inspection, Residential Thermal Imaging, and Manufactured Home Foundation Certifications. He also manages several rental properties through Zuehlke Properties, LLC. He can be reached by email at Aaron@Zuehlkeinspections.com or by calling the office at 608-931-7485.