I've heard investors and cash home buyers say, "I'm paying cash. I'm waiving the inspection contingency in the contract to make my offer more attractive."
Waiving the home inspection contingency in the real estate contract can be attractive to a seller especially in the hyper-competitive market we are currently experiencing here in Florida.
For some experienced buyers and investors this may be a good tactic. If you are seasoned in real estate transactions and you know what to look for or if, due to some circumstance, you are determined to purchase the property regardless of what defects it may have, skipping the home inspection process may work for you.
However, forgoing the inspection may be incredibly risky. I estimate the average residential home inspection in central Florida detects and reports on defects totaling $2,000-$5,000 in repairs.
If you are an investor or cash buyer you may say "That's fine. I can absorb that cost. I want this home." That's understandable and if taken into consideration at the outset can be managed.
However, in many cases the repair costs for identified home inspection defects can really rack up.
For instance the average roof replacement in my area costs $10,000-$40,000 depending on roof size and type.
A complete re-pipe, which may be necessary if aged galvanized water supply piping or brittle polybutylene piping is present in the house may cost between $2,000 and $5,000.
An electrical panel replacement, which is a common recommendation when the panel is over 40 years old or is a brand of panel that is a known fire hazard, may cost $1,500-$2,500.
Does the home have aluminum branch wiring? Aluminum branch wiring is a fire hazard and was installed in homes in the late 60's and early 70's when the price of copper skyrocketed. The cost to repair/replace aluminum wiring is $100-$300 per outlet.
The Inspection Report as a Checklist
In multiple cases the investor client has come up to me at the inspection and said "Hey JB, I'm buying this property no matter what. I'm going to use your inspection report as a checklist of things I need to get fixed."
This is a great idea. Whether your are an investor that is going to renovate and resell the property, rent the property, or a buyer who is going to move into the property. A detailed checklist of needed repairs and suggested updates is a valuable tool.
Even more importantly, home inspections often reveal hazards that should be corrected right away. Whether it's faulty wiring, leaky gas piping, trip and fall hazards, or Carbon Monoxide leaks, knowing these problems in advance is invaluable when considering the safety of the future occupants of the property.
So, forgoing the inspection in the real estate process can give the investor/buyer an edge in the transaction but may open him or her up to significant risks that can add up to big $$$$$. The home inspection report can provide the investor/buyer with a valuable list of needed repairs that when addressed can ensure the buyer that the home is in top shape. And most importantly, the inspection can reveal critical hazards that, when corrected, may save life and property.
Owner, Lead Inspector
Buyer's Guide Home Inspection