The market has been so busy for the past while that many buyers are frustrated and putting in offers without a home inspection. Many sellers are turning away any offer that mentions one. With so many people not doing a home inspection and only a few horror stories, many are asking is a home inspection necessary. There are also many articles that will tell you how important they are. So if they are so important, why are so many buyers not putting one in? The answer is really up to you, let me explain.
Is the price of the property leaving anything in your budget for repairs?
If you are financially stretched thin with the purchase price then you may want to include the home inspection. Finding an expensive repair after you spent all of your money can cause significant financial hardships. Finding it beforehand can literally save you from bankruptcy. Realistically not all repairs are going to be bankruptcy level, but even less expensive ones can really ruin the enjoyment of your new home. It may be difficult to scrape together even a few thousand dollars to repair a leaky pipe and the damage it caused to the drywall and floor.
How good are you at spotting deficiencies?
If you are pretty handy you may know what to look for that would make a home inspection necessary. Check out the big ticket items such as the roof, foundation, furnace, AC, windows, plumbing and electrical. If there are any unexpected repairs at least it likely will not be any of these more expensive items. There are no guarantees though as I have seen home inspections pass, and one of these items need repair shortly afterwards.
A home inspection is not a guarantee.
As just mentioned, I have seen a home inspection give a property a clean bill of health only to find a major repair shortly afterwards. Happened to me with my primary residence. We purchased at the top of our budget because the house looked great. First heavy rain and the carpet in the basement was soaked. Had to rip down the drywall, repair the foundation, and regrade the backyard.
How motivated are you to purchase?
Prices are climbing significantly year after year typically in the double digit percentages. For the sake of this example, let’s say a conservative and simple 10% (though it is typically closer to 15% if not more). On a $700,000 dollar home the difference between one year and the next is $70,000. In six months it would be $35,000. It does not work exactly like that as the market ebbs and flows with peaks and ruts from month to month but it does help demonstrate this point. If you miss out on a property because you put a home inspection clause and someone else did not, if you are still looking in 6 months time you will have to pay $35,000 more for the same property. If instead of putting a home inspection, you won in competition and after the purchase found something that needed repair or replacement, you may still be better off. Let’s say the furnace broke down and needed to be replaced. It was the middle of a holiday and the HVAC company had to come out in the middle of the night so they charge you top dollar of $10,000 for a new furnace and install. That cost of $10,000 today is much better than having to pay $35,000 more for the property in 6 months. So even if you do gamble by removing a home inspection and “loose at the gamble”, you may still be better off.
There is always a gamble though and you could be the one in a million that has a structural issue, or a major repair that could cost you significantly more than what you can afford. Statistically speaking if you are cautious and mindful, you are more likely to find a less expensive repair after you purchase a home without a home inspection than you are to find a major repair that will cause you financial distress.
That being said, I would never tell my clients to remove a home inspection because it is not my life I am gambling with but theirs. The decision is theirs, just like the consequences. Have I put an offer in on my own transactions without a home inspection? Yes but still lost out on competition. Have I put offers in with home inspection during this heated market? Yes and won in competition. It cost me more but in the end we walked away after the home inspections so they were well worth the cost.
If we were in a more balanced market, the answer to is a Home Inspection necessary is yes. Have one done on every property. But we are not in a balanced market and have not been for some time.
Removing a home inspection is not an easy decision but hopefully I have provided you some things to think about so you can make your own educated decision. So what do you think? Is a Home Inspection necessary?
*This article is meant to stimulate thought and educate on considerations concerning home inspections. Please make your own decisions based on your comfort level and experience.