Waiving home inspection? 24 hours to respond

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Waiving home inspection? 24 hours to respond

Diandra Duncan
Member since 2021 · 20 posts · 14 votes

Hey bigger pockets fam, 


I have a dilemma that I really need an opinion on. I'm looking to purchase my first SFH in Queens, Ny with a plan to house hack. I found one that basically checked most of my boxes for 750k; the upper end of what I was approved for. I put in an offer just under to increase my chances of getting the property. And although I was initially told by the listing agent that my chances are slim due to my down payment (5%), I was told today that the owner accepted my offer. However, the owner wants me to waive the inspection and instead I would get an informational inspection before signing the contract. I'm able to get one in two days however, the idea of waiving an inspection on an old home bothers me a little despite my realtor advising me that it's a ‘usual' in NY and even mentioned that NY is mostly an ‘AS-IS' state. I asked my realtor if I should counteroffer by lowering my initial offer to 725k-730k to offset this but he thinks it's a bad idea as it would get rejected. I spoke to a friend who thinks 740k is too much for a sfh and that I should just walk away. I know the market is bullish right now but does anyone have experience with this? And more specifically, in buying in NY? Is that price reasonable? Should I spend money on an inspection or just walk away? Any advice would be greatly appreciated.

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Stephen Brown
Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
5y

Do not waive a home inspection ever. Never ever.

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  • Brandon RushPro Member
    Real Estate Agent · Portland, CT · Member since 2019 · 761 posts · 849 votes
    5y

    Hey Diandra,

    I am from Jamaica Queens NY. Prices down there are astronomical and I would definitely be cautious of jumping in to something out of emotions rather than the numbers on paper. My big question is what makes this a house hack? Will you be forcing appreciation somehow while occupying or planning to rent out rooms? I just want to make sure this is true house hack with an end game behind it rather than just saying I am going to live in it and then rent it out after I leave.

    As for the inspection, it sounds like they are allowing it but as you mentioned, for informational purposes only. In today's market, I would say this is reasonable for a seller to do. It's a seller's market and they have the upper hand. There is no harm in moving forward with the inspection, as long as you have the option to back out if it does not meet your expectations. Worst case you lose the inspection money, walk away and learn from the experience.

    My biggest advice here, make sure the numbers work for whatever your goal is. Do not make this decision based on emotions. $750k is nothing to play with. Seeing that you only putting 5% down, will you have money in reserves for when stuff breaks, because I can guarantee you stuff will break. 

    Not trying to scare you, just trying to be realistic. Good luck and I hope this helps!

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    Not sure why it would matter how much your down payment is as the seller should only care that you are pre-approved and your offer price.  

    I wouldn't waive the inspection.  Tell them that you can have it done in two days and if you want-it is just to see what the problems are, that you won't adjust your offer price....you may back out of the deal, but that is different.  

    As for your friend who said $740K is too much-what do they do for a living?  If they aren't in real estate, they won't know the market.

    5Reply
  • Andrew B.
    Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    5y

    It sounds like there might be some confusion. I don't think they are asking you to waive you inspection. I think they are asking you not to request price concessions as a result of the inspection. It sounds like you are still welcome to get the inspection and back out if you find something catastrophic. 

    9Reply
  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    5y

    @Diandra Duncan, I would sign it, if you want the house, but only if you have a financing contingency too.  Get the inspection, and if it isn't up to your standards, exercise your financing contingency and walk away with your earnest.  

    I am guessing the seller just doesn't want to negotiate a post inspection repair list, but guess what: the reason you got the deal with 5% down and 10k under list in this market is because you are the highest bidder.  And even if you came back with a small list fo repairs post inspection, there is a chance they will still work with you, depending on where the other offers are.  

    5Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y

    Do not waive a home inspection ever. Never ever.

    14Reply
  • Nathaniel Walker
    Investor · USA · Member since 2017 · 94 posts · 71 votes
    5y

    An accepted offer without a signed buyer's contract is not a true accepted offer and the seller can walk or accept another offer. If you pay for an inspection both you and the seller are not obligated to move forward, however, if you find something significant the seller will not be able to claim that he was not aware in the sellers disclosures. I suggest review the seller disclosures prior to the inspection, get the inspection if you really want the home but be prepared to walk or lose the home. If that happens advise the seller that now that they are aware of the issues they will need to disclose them to the next potential buyer which could affect their ability to sell the house which might give you leverage with the seller.

    2Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    5y

    I would call the seller's agent and clarify. @Andrew B.is likely right that they are simply saying they won't accept any reduction in price or do any repairs. But it's hard to say from here so I would call to clarify. 

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    5y

    Do not do the deal. You are paying 750k for a building as a first-time buyer/investor and you are going waive all inspection on a building in Queens? You will be basically writing your way into foreclosure most likely. Just because sellers and listing agents want you to waive appraisal and inspection to win does not mean you should. Your offer is still good for the property and you give up all of your leverage and protection by waiving inspection. We have our buyers use the phrase "buyer will limit inspection repair requests to major electrical, foundation, structural, environmental, and plumbing issues." The language is intentionally vague (really anything can be argued to be major), but it tells the seller you aren't looking for cosmetic repairs.

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  • Chace Fraser
    Realtor · Portland, OR · Member since 2017 · 357 posts · 259 votes
    5y

    @Diandra Duncan you could shorten your inspection period to 2-5 days and say that buyer to request no repairs or credits for repairs unless required to meet the appraisal contingency.

    1Reply
  • Diandra Duncan
    OP
    Member since 2021 · 20 posts · 14 votes
    5y

    @Brandon Rush Thanks so much for your advice. So I would be renting the basement out, the space is big enough to do so and it has a separate space for bathroom and kitchen; I know there are several legal aspects of that to consider as well. I know I wont be able to cash flow but at least it'll help me earn equity on the property. yea 750k is ALOT, and its what keeps bugging me because its the higher end of what I was preapproved for but I will have a decent amount of reserve as my brother will be coming on board with me.  

    1Reply
  • Diandra Duncan
    OP
    Member since 2021 · 20 posts · 14 votes
    5y

    @Theresa Harris Yes, so my friend is a nurse who also does REI and owns a few properties. However, she has not bought property in NY for years due to the increasing prices. I explained the current state of the market and she suggests I look elsewhere, like Jersey

    0Reply
  • Nicolas Nuvan
    Real Estate Agent · Brooklyn & Queens · Member since 2020 · 49 posts · 22 votes
    5y

    @Diandra Duncan

    I’m an agent in Queens.

    Don’t waive inspection, also, it’s hard to say if the home is overpriced without the location..

    My client very recently got a 2 family for 790k in Woodhaven, fully renovated.

    New York is not an As-is state lol, an inspection is standard for SFH and MFH. Even for condos and coops!

    Based off of the information provided, agent sounds a little commission hungry. 

    4Reply
  • Diandra Duncan
    OP
    Member since 2021 · 20 posts · 14 votes
    5y

    @Andrew B. Yes I was kind of confused initially because I wasn't even aware that some people forgo inspection. But that was the exact wording my realtor used. I literally spoke to him minutes ago after doing some research and now he's saying it isn't being waived, it's just the contingencies that the seller is requesting. 

    0Reply
  • Diandra Duncan
    OP
    Member since 2021 · 20 posts · 14 votes
    5y

    @Evan Polaski Yea for sure. I agree. I think he just wants to make sure he locks in my offer because mine was closest to what his asking. That just makes me a little uncomfortable that there's really no wiggle room. But I'm still gonna go ahead with the inspection and like you mentioned, worst case scenario, i lose out on 200 bucks

    1Reply
  • Diandra Duncan
    OP
    Member since 2021 · 20 posts · 14 votes
    5y

    @Stephen Brown for sure! the idea of that alone terrifies me

    0Reply
  • Diandra Duncan
    OP
    Member since 2021 · 20 posts · 14 votes
    5y

    @Andrew Syrios So the stipulation as explained by my realtor was more like the seller isn't willing to offer credits. There really wasn't any mention of repairs being done

    0Reply
  • Diandra Duncan
    OP
    Member since 2021 · 20 posts · 14 votes
    5y

    @Nicolas Nuvan. I agree! And the property is in Queens Village. Newly renovated. And according to  my realtor (he works for better home), they are salaried

    0Reply
  • Sam Domach
    Investor · Milwaukee, WI · Member since 2014 · 29 posts · 17 votes
    5y

    @Diandra Duncan - I think this is pretty common in single family homes right now across the United States. With the amount of demand, there are a lot of people waiving their inspections which helps the seller tremendously, but puts all of the risk of the purchase onto the buyer.


    For instance, if you were not to get an inspection for the deal and got one after only to find out that you needed a new $20K roof, would this property still work for you? I would imagine that would blow up your numbers quite a bit. You would not have the ability to renegotiate the price with the seller and would need to pay basically an additional $20K for the house out of pocket.

    In the SFH game, emotions play a pivotal role in the deal, more so sometimes than the numbers. With so many unknowns without an inspection, I would not feel comfortable walking into that property without one. There are a lot of properties out there....

    Sam

    2Reply
  • Diandra Duncan
    OP
    Member since 2021 · 20 posts · 14 votes
    5y

    @Jonathan Greene Yea i completely agree! As a matter of fact, the seller wanted me to waive the appraisal and the mortgage contingencies as well but my realtor declined. I really am not sure what the seller's angle is but that was a little left field for me. And I think that makes sense, limiting repairs/credit requests to major issues because they really should not expect buyers to pay an arm and a leg for a faultline shack

    1Reply
  • Joanne Tsai
    Investor · Millburn, NJ · Member since 2018 · 141 posts · 100 votes
    5y

    @Diandra Duncan

    They are allowing you to do inspection but having it informational. So if they won’t credit you for the issues found, you can still choose to cancel the deal. they probably don’t want to be bothered to see the inspection report, not sure if in NY state they would be legally required to disclose if you actually send them the inspection report after.

    To waive appraisal contingency is very common when there is a bidding war, but if they pick you with 5% down, it’s probably not that competitive. Yes % down does matter, seller takes it as an indication of ability to close.

    As a first time buyer, you should only do what you are comfortable with. 740k is not a small amount, if the appraisal comes back close at 730k, that’s still another 10k you need to have in cash.

    1Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    5y
    Originally posted by @Diandra Duncan:

    @Jonathan Greene Yea i completely agree! As a matter of fact, the seller wanted me to waive the appraisal and the mortgage contingencies as well but my realtor declined. I really am not sure what the seller's angle is but that was a little left field for me. And I think that makes sense, limiting repairs/credit requests to major issues because they really should not expect buyers to pay an arm and a leg for a faultline shack

    Waiving appraisal contingency means you will pay your offered price no matter what the appraisal says.

    Waiving mortgage contingency means that if you cannot qualify for the loan, the seller can keep your earnest money. 

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y

    @Diandra Duncan I have also seen where people write in the agreement that they will not request repairs for items costing less than $2500 (or whatever amount you feel comfortable with). Of course even if someone requests repairs, the seller can still say no. The point is if a major issue is found, you are either going to ask for a concession or walk away. Even if the seller says they will not make repairs, I would still ask if something is found. In most states after being made aware of a major defect, you are required to disclose to future buyers. 

    1Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    5y
    Originally posted by @Diandra Duncan:

    @Andrew Syrios So the stipulation as explained by my realtor was more like the seller isn't willing to offer credits. There really wasn't any mention of repairs being done

     That sounds about the same. You can still do an inspection and if the home isn't up to snuff, you can walk and get your emd back. In this ridiculously hot market, it doesn't surprise me that seller's have stipulations like that.

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  • Charles Situ
    Rental Property Investor · Wayland, MA · Member since 2020 · 56 posts · 18 votes
    5y

    @Diandra Duncan My first property I purchased was a condo in Kew Garden Hills, Queens. Although that transaction does make sense to me today after I learned to invest long distance. It was a great way for me to get started while living in NYC. I house hacked it by renting out the extra bedroom. It helped me in many ways—building equity instead of paying rent, getting experience as a landlord, years later was able to cash out refi the equity, and even 1031 exchanged it two replacement properties.

    But in my opinion, with this being your first purchase and the fact that you said it is old, I don’t think you should waive inspection and possibly not go the route of doing an informational inspection, unless you walked through the place with an expert like a contractor. The times I done informational inspection was when I had more experience in spotting things and did some research to give me confidence there weren’t major issues (e.g. an apartment being converted to condo in the last couple years so it had meet some requirements recently; all the major items like plumbing, electrical, HVAC were replaced recently).

    It sounds like the seller is allowing an informational inspection and not willing to fix or provide credits for anything found to be wrong, but make sure you get clarification. Waiving inspection is completely different.

    I never waived mortgage contingency completely. But I have agreed to cover up to $20k of difference if appraisal was below purchase price. It did help me win the deal. I was lucky that appraisal actually came in above and I had the extra cash just in case if I needed it. But since you only have enough to do 5% down, it doesn’t seem like this is an option for you.

    1Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    5y

    @Diandra Duncan The seller accepted your offer (presumably in writing, or it doesn't count) and then wants you to waive inspection.  Presumably your accepted offer has an inspection contingency.

    If that's accurate, you have every right to do the inspection and it's especially important because as you've said, you're spending at the top of your range.  That means you have limited funds to cover unexpected repairs.

    My instinct on this is that the seller is trying to hide defects that would cause you either to bail out completely or to try to renegotiate your purchase price.  My bet is that the seller knows the house needs substantial work and he thinks he has a sucker on the hook.

    Don't fall for it. 

    If the seller refuses to allow inspections, read your contract and use whatever contingency you need to in order to get out.

    The "hardly waits" is an expensive disease that causes you to ignore warning signs and make bad decisions.  Don't be a victim of the "hardly waits".

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