Taking the risk to forego, inspection contingency on an offer is a strategy many buyers are using now, due to low inventory, and more buyers competing for the small amount of listings available. Because this market is ridiculously competitive, with 20+ offers on many properties, many offers have been written to exclude an inspection contingency and buyers are offering well over list price as well as meeting any appraisal gap.
Typically all offers occur within 48-72 hours once a listing goes active, giving the Buyer very little time to make decisions. Sometimes the Sellers Disclosure form is only updated to the listing shortly prior to it going active so Buyers have little time to assess a home in advance of writing an offer.
Cash is still king if your offer is high enough, and, you make inspection non-contingent or forego one altogether. So, how can buyers have some peace of mind regarding the homes they are viewing?
Some buyers have chosen to use an inspector’s walk-through consultation. Many inspection companies offer them, they typically charge a fee for each home but decrease the cost after the first one as long as homes are close together and driving distances in not an issue. A walk-through consultation typically lasts 30 minutes, and, the only tool the inspector will bring is a flashlight.
The realtor and clients must be present during this consultation which occurs during their 30 minute showing, and, is typically the maximum amount of time for each consultation. No report is sent afterward, no photos are taken, but, as much of the home as possible is covered in that 30 minute period.
Items that the consulting inspector will look for include: foundation issues, wet basement, evidence of water in ceiling or under/around baths and kitchens, plumbing, neglected furnace/boiler, electrical hazards, old knob and tube wiring, potential water-intrusion rot near windows/doors, proper drainage – gutters & downspouts, an exterior review, and much more.
It is typically not possible to do a thorough investigation of all components, and, during Winter, the roof may not be visible enough to gauge remaining life expectancy of roof, but, a non-contingent home inspection can be accepted by sellers, offering a more detailed inspection once a Purchase Agreement has been accepted by the seller.
In this fast-moving market, inspectors try to stay flexible to accommodate these showings, although they may not always be able to do so. Pricing may start at $200 for the first walk-through and might decrease depending on how close the next listings are in the showing tour. Every company has different rates and you will need to schedule showings in advance.
We try to help our Clients strategize their search in such markets as we are experiencing currently, it is definitely a Sellers Market, so, buyers need to take advantage of any tools available to make this market work for them.
Despite offers of as much as $90,000 over list price, some clients still are losing to offers with no inspection contingency. So, at some point, it might prove wiser to forego inspection contingency at least until the market shifts or more inventory comes on the market to lessen the amount of competition.
Buyers without deep pockets are being priced out of the market at this time if they don’t have sufficient cash to bring to the closing table, especially if the appraisal comes in low and seller refuses to negotiate price.
Many sellers are asking for confirmation by buyers of their ability to meet an appraisal gap. Sellers have most of the leverage at this time and they are taking full advantage of this market.
Written by Claire Bastien for www.BuyersRealEstateGroup.com