5 Things That Can Give You Peace of Mind When You Waive an Inspection Contingency
As a buyer in a seller's market - you are often encouraged to submit a "clean offer" and waive your contingencies.
So, what is a contingency anyway?
A contingency allows you to get out of a contract and obtain a refund of your earnest money deposit under certain conditions.
So, if you waive a contingency, you are waiving your ability to get your money back. There are risks.
If you change your mind and decide not to purchase the property after you've waived a contingency, you are within your rights - but you may be forfeiting your earnest money or the seller may have other remedies againt you.
Scary, right?
So - how can you be competitive in your offer while still having some peace of mind?
Do as much prep work ahead of the offer submittal.
Although there are many contingencies, for the sake of this article, let's focus on having some peace of mind when you choose to waive an inspection contingency:
1. Do a Pre-inspection. This can only be done if the seller gives permission for a pre-inspecion. It's worth the several hundred dollars to know what you're getting into before you even put an offer in on the home.
Often on short notice, you can hire an inspector to complete a limited pre-inspection. This type of inspection is typically shorter than a full inspection, but it will offer a high level understanding of issues on the home and often costs less than the full version.
2. Review the Seller's Inspection. Sometimes a seller will complete their own inspection. If the seller shares their inspection expect to have to have your buyers sign a waiver to hold harmless the inspector, the seller and agent of the transaction.
3. Get a Home Warranty. If you are butting up against a tight timeline and won't be able to do a pre-inspectoin, buy a home warranty for a year and renew as needed. A home warranty is different than home owner's insurance. Think of home warranties as maintenance issues on your home and home owner's insurance as coverage for larger events like a fire or theft.
Do your homework and find out what a home warranty will cover (and what it won't). You can purchase different levels of the home warranty and coverage varies.
4. Alternatively, get a Full Inspection after you purchase the home. It will give you a clearer understanding of the issues of the home and allow you to create a home maintenance program on your home.
5. Ask your real estate agent a few questions. Your real estate agent will usually have some general knowledge and resources about repair work on the home. Your real estate agent is probably not a general contractor, but they can provide directional information - or refer you to the contractors that can give you more detailed information, particularly if you are planning to purchase a home
Buying a home in the pacific northwest, you can most assuredly know the obvious: water is an issue. Water has the ability to wear down a composite roof, wood siding and wood decking.
Have a chat with a contractor. Find a contractor that can provide some basic worse case scenarios, prices per square foot, replacement costs, etc.
If you enact some of these suggestions, you don't have to feel helpless when you put in a contract where you waive an inspection contingency.
Kristin Bushnell is Designated Broker of Bushnell Real Estate Solutions and Co-owner of Bushnell Craft Brewing Company in Redmond, WA. Check out my profile here.
If you are ever interested in chatting about real estate, contact me at kristinbushnell@gmail.com or call me at 425-559-1355. I'll buy you a beer (or non-alcoholic beverage, if you prefer!), and we can chat about real estate until your heart's content.
