Due to increased competition within the housing market, sellers have begun requesting that buyers waive their right to a home inspection if they want their offer to be accepted. With that said, is there ever a time in which real estate investors should follow similar practices? Furthermore, is it ever beneficial for them to waive their option to receive a home inspection?
The truth is, there isn’t one. Real estate investors should always seek the assistance of a certified home inspector, as it will reveal potentially catastrophic problems and mitigate excessive risk. If you consider casting aside your due diligence to waive a home inspection, you had better be able to absorb the loss of your investment and much more. Those not awarded the luxury of excess funds would be better served exercising their right to a home inspection.
Should you waive the option to preform a home inspection, you are admittedly placing yourself at unnecessary risk. Sure, you may have a decent reserve fund to cover re-wiring, remodeling, and even the costs associated with replacing the HVAC unit; but the benefits may not outweigh the risks.
Visual flaws in the structure may be the tip of the iceberg. What if the roof or the foundation needs to be replaced? What if the title is uninsurable? Perhaps the property will be condemned by the city and demand it be torn down to the tune of tens of thousands of dollars. Hidden costs, such as these, could lead to financial suicide.
How many deadbeat properties, bought for cash or financed, can you afford to be stuck with while simultaneously covering holding costs on a month-by-month basis before you fold? A significant accumulation of hidden costs, that could have easily been avoided with a home inspection, could force you to lose money on an investment.
Hopefully by now you can see that waiving a home inspection is not the best option. However, if you come across a rare, absolutely ‘must-have’ deal, the following tips should help you navigate the process with ease:
- Stick to flipping real estate contracts and never take title or ownership
- Lease options
- Making ‘as-is’ offers with the right to inspect (and bail if repairs exceed $X)
- Look for properties in different prices ranges, niches and areas