It was a calculated risk, but one that prospective homebuyer Kat Dodge felt was necessary.
“I kept bidding on houses that I was close to but didn’t win. I started looking in February and made offers on six places that I didn’t get,” said Dodge, 28, communications manager at the University of Minnesota. “Prices are going up and so is my rent. I had to make my offer more competitive.”
After walking through a two bedroom townhouse that was just going on the market, she decided to change her game plan. For the first time, she made a bid that waived her right to an apartment tour.
“In this highly competitive market, the lack of inspection is one way to lure sellers into picking you,” she said.
House viewings have long been as much a part of a transaction as a “For Sale” sign in the front yard. But in the red-hot marketplace of recent years, with many sellers choosing from multiple offers above price, more and more deals are being closed without this once-standard element of the sales process.
Experts weighed the pros and cons of the growing practice of skipping home inspections, leading home inspectors to be somewhat apprehensive about emerging hybrid models of surveying a home.
Inspect or not
Skipping the inspection is an option that Chris Galler, CEO of the 22,000-member Association of Minnesota Realtors, advises against.
“We have recommended inspections for years and continue to do so in this market today. Inspections are good value for consumers buying existing homes; new homes have guarantees,” he said.
Inspectors typically provide buyers with a written, top-to-bottom report that reviews and evaluates the condition of a home’s internal and external structure, its safety, and major systems—electrical, plumbing, HVAC. The inspectors spend a few hours on site, poking, poking and letting their practiced eyes wander over the property. The inspection fee that the buyer pays depends on the size of the house.
According to Galler, the aim of the inspection is not to uncover every defect in the house, but to give the buyer a realistic assessment.
“An inspection educates the buyer about the property and that will help them succeed as a homeowner. The report lets him know that the furnace or maybe the water heater or the roof is fine today but will need to be replaced in five or 10 years,” he said.
While it is ultimately up to the buyer whether they make their offer dependent on a viewing or not, they often listen to the advice of their real estate agents.
Real estate agent Tyler Miller, CEO of the Blaine-based Tyler Miller team, tells clients that delaying the inspection can be used as a strategic tactic when writing an offer.
“You may be negotiating with the seller’s agent, who mentions that he has multiple waiver bids. When faced with that, we may also have to forego it in order to win, or be willing to pay more if we don’t,” he said.
An inspection can reveal issues that the seller may not have been aware of, but once the seller has been made aware of them, they must communicate them to potential buyers. Miller said it’s just one reason sellers prefer bids not to be dependent on an inspector’s report.
“It’s a great win for a salesperson to avoid the what-if,” he said. “Around the inspection there is a window where buyers can cancel for any reason, including buyer remorse. Without inspection, the seller accepts the offer, it becomes pending and they can start packing.”
Miller said some buyers are seeking calm with new inspection variants that have surfaced recently.
One is to make the process pass or fail. The buyer still receives an inspection, but agrees not to use the results to renegotiate the price or repairs up to a certain limit, such as repairs. B. 5,000 US dollars. With this option, the buyer retains their right to leave if a costly deal breaker is uncovered.
The other development is a walk-in inspection, where the inspector accompanies the buyer during the demonstration and provides an on-site verbal analysis.
“Even a full inspection can’t capture everything, but a good inspector can see a lot in an hour-long mini or quick inspection,” Miller said.
Home Inspector Jeremiah Anderson estimates that about a third of his business is now related to these inspections, which he conducts for $125, less than half what his full inspection report normally costs.
“I was against it at first, but I’ve backed away from it. It has value,” he said. “The buyer can ask for specifics, and while I’m not a general contractor, I can answer questions about what’s possible if they want to remodel.”
Since JB Anderson Inspections was founded in 1999, it is estimated that Anderson has completed approximately 5,000 inspections. But with fewer buyers checking in on his reports, his business has plummeted and he’s had to fire two inspectors who worked for him.
He fears skipping inspections is a desperate move that will catch up with some unsuspecting buyers.
“People are in a bad situation; they have sold their house and live with their families or in short-term rentals. They want out so badly they forgo the inspection to get the deal,” he said. “They think short term how do I get a house, not about what might be coming that they don’t have money to fix because they spent so much on the property.”
But Miller said he suspects the traditional inspections of yore will return to routine if the market inevitably cools, which is already happening.
“We’re in uncharted waters,” he said. “My team probably sold 120 houses without inspections. To my knowledge, batter, no buyer has come back to say they came into a house with many problems.”
inspection of the inspectors
To become a real estate agent in Minnesota, you must test, license, and educate yourself. None of these are required to become a Minnesota home inspector. Unlike other states, Minnesota has no exam to pass and no state body to oversee or regulate home inspectors.
Several for-profit companies offer educational courses and home inspector training, but there is no law that would prevent someone from starting a small business as a home inspector without formal schooling.
The American Society of Home Inspectors (ASHI) is the industry’s professional association; Based in Minneapolis, ASHI Heartland represents approximately 90 home inspectors in Minnesota. To qualify for membership, inspectors must undergo a background check, pass a test, and attend continuing education courses. After conducting 250 inspections as employees, inspectors can become ASHI certified and thus promote their work.
“It’s important that consumers verify their inspector, not just ask about the price,” said Matt Butcher, president of ASHI-Heartland, who has been a home inspector for 19 years.
Butcher said inspectors have special value right now in identifying a new wave of homes that look good until the surface is scratched.
“Nowadays, upside down houses are the biggest problem. A do-it-yourselfer buys it to resell it quickly, and they go on projects they’re not qualified for,” he said. “A good inspector can find evidence of bad work from someone who learned on YouTube.”
Kat Dodge is adjusting to her role as a first-time homeowner. Last month, she finally made a winning bid, completing the southeast subway townhouse without having it inspected. She is busy beautifying the room to match her style.
“I’m thinking about doing this fad of a geometric design on bedroom walls and maybe a lime wash in the bathroom,” she said.
Dodge has found “no noticeable problems” in its 25-year-old unit and said it’s not overly concerned about the soundness of its interior systems. Her perusal of homeowners association documents was reassuring about the building‘s exterior.
“I did what I had to do to get a place. First I really saved money and then skipped the inspection to sweeten my offer,” she said. “I feel pretty good about it, but we have to see how it works.”
Kevyn Burger is a Minneapolis-based author and broadcaster.