Are you considering waiving your Inspection Rights……..

Are you considering waiving your Inspection Rights?

I get it, its a tough market and you have probably lost out on a number of bidding wars and it is frustrating. Someone suggested you waive your inspection rights as a way to entice the seller to accept your proposal, but is that really in your best interest? There are two issues to consider before you make this decision, first do you have the financial ability to correct expensive issues, and second are you sure that your investment can absorb the cost of the repairs?

The first is self-explanatory, while the second may not be as clear cut, because this market is so hot right now and home prices are being artificially driven up because of high demand and low available inventory. What happens if you have to put $20,000 into a repair or repairs and then market conditions change and market values re-adjust downward, if you have to sell after a few years in the home you may not recoup that investment in the home and actually loose money.

Thermal image show leaking water from using shower

A recent example, I inspected a newly flipped home that visually looked good and the relator and buyer really didn’t think I would find much more than the “usual” issues, however while doing my typical “deep dive” evaluating the home I found that a brand new shower installed in a bathroom addition in the finished basement was leaking. The leak wasn’t apparent until the shower was running for 30 minutes or more, and would not have been noticed until after moving. The entire shower floor and wall tiles will require removal to repair and rebuilding the shower at a cost of $3000-$5000.

There were a lot of electrical issues as well requiring repair, the biggest being that the home was not grounded at all and while trying to search for an earth ground rod, I was pulling aside insulation behind a finished basement wall and saw the floor moving in the dim light. When I shined my flashlight on the area, I saw a hole in the concrete slab and an opening into the cast iron drain pipe below the slab, the movement was water that was draining from the basement shower and sink. Now we have a brand new finished wall that will need to be removed so the drain pipe can be dug up and replaced, probably another $2500-$3500 repair cost.

So the question is how do you entice a seller yet still protect yourself from a major mistake that you will have difficulty recovering from financially? This a discussion to have with your relator, and some have indicated to me they will write into the contract that the buyer will be responsible for items or repairs that cost more than $1000 or $2000 each, or have maximum amount that the buyer feels comfortable with. In other cases they may write in the the contract that inspections are informational only and reserve the right to cancel if the issues are too big of a financial burden. Whatever you and your Realtor works out under contract, make sure it does not put you into a situation where the financial burden will be more than you can handle.

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