Home Inspections, when they make sense, when they don’t – the Buyer must decide.
All real estate contracts are fundamentally about money & risk, the balance between price and risk is what negotiations are about. As a Buyer you want a low price and low risk, as a Seller you want a high price and low risk – how do you reconcile those opposing objectives relative to property inspections? The question of to inspect or not is really driven by market conditions which are constantly evolving thus changing the risk equation.
COVID-19 radically disrupted the real estate market in 2020 shifting the balance of power in the market in fundamental ways. People became untethered from working where they live, demand shifted to more rural areas and money was pumped into the economy at unprecedented rates. All that led to a hyper competitive real estate market where the Seller could insist on little or no risk as they evaluated offers for their property from multiple Buyers.
What does that mean for the Upper Valley market and home inspections? Pre-COVID home and septic/sewer line inspections were the norm and generally accepted by Sellers, post Covid inspections became the exception in contracts accepted by Sellers. With demand for homes high and supply low, cash offers with no inspections have been prevalent over the past two years. The risk equation shifted entirely to the Buyer, if you wanted to buy a home, you typically have been required to assume most or all transactions risk.
As we move through the summer of 2022 market fundamentals are still evolving with Sellers still generally unwilling to accept much if any risk relative to inspections. As interest rates rise and cash is ultimately extracted from the economy, the balance of power will eventually shift towards more balanced risk sharing between Buyers and Sellers. When it does, it will still be market and property specific which is where our expertise as Exclusive Buyer Brokers is your key to successfully navigating the risk equation.
Some other general inspection dynamics to be aware of:
There is no such thing as a perfect home, every inspection will uncover multiple issues, many of them common and of little importance, yet they may sound scary. Our task is helping you decide which issues are critical to you in your quest for a home you will enjoy living in.
Sellers do not want to fix things as they leave their homes and you generally should not want them to. If they do, their interest is getting the job done for the least costs, your objective is to get the job done right. Cash off purchase price or a Seller contribution towards closing costs is generally the best solution to inspection issues.
When evaluating and making an offer on a home it is entirely reasonable when market forces dictate that you as the Buyer choose to forego some or all inspections. You as the Buyer need to be aware of the risk you are taking and what the alternative risk looks like. These last few years, the alternative has been high rents or no housing security.
Price point and inspection risk is irrelevant, all homes carry equal risk of unexpected problems surfacing as you assume ownership.
Having an Exclusive Buyer Broker by your side to help you evaluate inspection risks is very helpful. We do it every day and our experience ranges widely over different types of properties and markets.
If you have any questions or would like to learn more about home inspections, please contact Housing Solutions today.