How necessary is an inspection contingency?

Most offers are not rejected on price. They’re rejected because the terms of the offer would leave the seller in an uncomfortable holding pattern for two weeks or longer. When owners can get all the money they want, they certainly don’t have to take on the risk and worry of waiting for a buyer to decide if they’re going to proceed or renegotiate. If you think you’re taking on a significant risk to buy without a contingency to inspect, take some time to decide if there is anything that amounts to a risk worth fearing.

Every house has some conditions that owners consider insignificant, and buyers will consider defects. A buyer rarely asks the seller for a concession in a balanced market after discovering conditions that might require a repair. When homeowners have one offer and nothing on deck, conceding to a two thousand dollar price adjustment or making a minor repair is a simple solution to get to closing without starting over. Most renegotiations over inspection issues involve minor concessions of a few thousand dollars or less.

When your auto insurance policy has a $2,500 deductible, is a $2,500 repair to your $350,000 house a risk at all? What if the cost of fixing a hidden defect is $5,000.00 or $10,000.00? Now we’re talking about significant cash. Or are we? Most people agree to pay $5,000 or even $10,000 more than their highest offer to win the accepted offer in times like these. We see it all of the time. In competition, given a counteroffer and a choice to pay a little more than they planned or hold the line and keep looking, homebuyers make the wise decision and pay the price.

Making an offer without including a condition to inspect the property may not be a risk beyond your comfort zone. If you’d pay $10,000 more than your best offer to own the house, maybe you can accept the responsibility to take on a $5,000 repair that may or may not be necessary. There are some homes where the high-cost repairs could be lingering. It’s a rare inspection that turns up anything more than deferred maintenance. The cost of including a contingency to inspect and renegotiate is a rejected offer. Before having an inspection contingency in your offer, decide if an inspection is likely to find anything that you couldn’t live with or you couldn’t cover the cost of the repair.

Inspection contingencies are oversold in part to protect the broker. I think home inspections find their way into offers, not because a buyer thinks it’s necessary, but because the buyer agent fears something and prefers to have the protection of a professional inspection. Don’t let an agent’s fears influence your decision to make your offer more attractive to the seller. Price, security, and convenience will get your offer accepted or rejected this year.

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