The market is really on fire in Northern Virginia right now!

Literally, homes are going on the market on Monday and under contract the next day. As a result of this trend, homes are selling for top dollar and buyers who are looking for a home are wondering how to make their offers more competitive. One thing buyers are doing to make their offers more competitive is excluding a home inspection contingency. Often, when you waive your inspection contingency it makes your offer more attractive to the seller and provides greater odds of your offer being accepted. However, many home buyers are asking, what are the risks of removing the home inspection contingency?

For starters, let’s address the three options regarding the home inspection in Virginia. The obvious is to completely waive the home inspection and purchase the home in As-Is condition. If you were to have an inspection done after waiving this contingency, you could not use it to request repairs or void the contract and have your Earnest Money Deposit (EMD) returned to you.

The most common option is Home Inspection with the Option to Negotiate Repairs or Void. The buyer and seller agree to a specific amount of time, maybe seven days, for the buyer to inspect the home and provide the seller with the inspection report and a list of requested repairs if any. The buyer and seller will have time to negotiate those requested items to determine which ones will be repaired and which ones will not. If the two parties cannot come to an agreement, the buyer can walk away and have their EMD returned to them.

Additionally, because this option also has the option to void, the buyer may walk away without requesting repairs be fixed.

The last option is Home Inspection with the Option to Void Only where the home buyer has a specific amount of time, which is negotiated by the buyer and seller, to complete a home inspection. However, the buyers only option is to void the contract if they have issues with the home inspection results. If the buyer does decide to void the contract in the specified period, they are entitled to their EMD.

What is the purpose of a home inspection?

The main purpose of a home inspection is to provide the buyer with critical information regarding the home for them to make an informed decision on their purchase. Typically, home inspections don’t only report on major defects in the house but also include maintenance advice and general knowledge of the workings of the property. For example, a home inspection will let you know where the water shut-off valves in the home are and how to change the filter for the furnace.

Should you remove the home inspection contingency in a competitive market?

We are in a very competitive market and many homes are receiving multiple offers. I believe that each situation will call for a different strategy in getting your offer accepted. Assuming that you are not a repairman/woman or someone who is actively involved with flipping homes, here are few things to consider when deciding to put an offer in with no home inspection contingency. First, you could consider if the home is newer or if it has newer appliances large ticket items like the roof, water heater, etc. You also may want to consider the price you are getting the home for. If you are getting the house at a respectable price, then you may consider removing the home inspection. You also should consider how much money you have saved in the event a home repair does arise after you purchase the home.

Your offer will often be more competitive if you ask for the Home Inspection with the Option to Void only, versus the Option to Negotiate Repairs or Void. You may also discuss with your agent the ability to still get a home inspection done for information purposes only so that you can know what you are buying. If you know someone who works on homes, you may wish to have them walk the house with you if you cannot do a home inspection, so that they can give you their opinion about the quality of the home that you are purchasing.

You may also consider waiving the inspection if the sellers already had a home inspection done and are willing to provide you a copy of the report. Last year, my client submitted an offer on a home that had already been under a contract that fell through for financial reasons. I learned that the previous buyers did a home inspection and the agent was willing to share that report.

My client decided to waive the contingency because the report was not very damaging.

As you can see, there is a lot to consider when deciding to waive your home inspection contingency. Although this is generally a great tactic to use in a very competitive market when there are few deals to be had, you should do it with both eyes open. Know the risks and be prepared! Also, if you’re looking to sell your home – this is a perfect time!