Is it okay to ever waive the inspection?

Rental Property Investor · Member since 2019 · 199 posts · 42 votes

Hello everyone. Is it ever OK to waive the inspection? I put in an offer for a three family home, recently fully renovated inside and out. In speaking with the agent he mentioned I have a better chance of getting my offer excepted if I waive the inspection. What are your thoughts?

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Edward Liu

Palo Alto, CA · Member since 2017 · 230 posts · 200 votes

My suggestion is to get a better agent. No good agent would suggest to waive inspection as way to improve your chances. Agents have suggested to me to offer all cash, reduce inspection period, reduce closing time, increase deposit, increase $$, etc., but never waive inspection. Not a single agent ever suggested it - I have dealt with at least 100+ agents over the years.

I don't trust anything seller tells - even if they say it is fully rehabbed. Sometimes the seller doesn't even know the structure problems, until someone does inspection. Waive inspection is a big NO for me.

Only scenarios okay to waive inspection is you are an inspector or you plan to tore down the building and do a rebuild.

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Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
6y
@Simon Obas
Just because a building was advertised as rehabbed doesn’t mean they did a quality job. You can waive the inspection since it’s your right to wave it. If during your walkthrough it includes a thorough examination you could. I would not, I always conduct an inspection even on foreclosures/ROE’s. I’m just cautious. If your going to completely renovate it, it might make sense, but I am always concerned about structural issues that I could have seen if I had done one. I know investors who have waved it. Just not my style.
Good Luck.
5 Reply
Lloyd Preece
Rental Property Investor · NJ · Member since 2020 · 57 posts · 53 votes
6y
I wouldnt, unless you have an eagle eye for moisture, foundational issues, cracks, roof condition etc. ~$500 now can save you thousands down the road as i found out last week!
12 Reply
Edward Liu
Palo Alto, CA · Member since 2017 · 230 posts · 200 votes
6y
My suggestion is to get a better agent. No good agent would suggest to waive inspection as way to improve your chances. Agents have suggested to me to offer all cash, reduce inspection period, reduce closing time, increase deposit, increase $$, etc., but never waive inspection. Not a single agent ever suggested it - I have dealt with at least 100+ agents over the years.
I don't trust anything seller tells - even if they say it is fully rehabbed. Sometimes the seller doesn't even know the structure problems, until someone does inspection. Waive inspection is a big NO for me.
Only scenarios okay to waive inspection is you are an inspector or you plan to tore down the building and do a rebuild.
15 Reply
Chris Stroup
Realtor · Fayetteville, NC · Member since 2019 · 97 posts · 109 votes
6y
I think you should always get an inspection unless you are doing a huge renovation. I have had inspections turn up things that I would never have found on turnkey rentals.
Depending on your area, we always do a termite inspection too. It is the best 40$ you will ever spend. Termites are pretty bad in Fayetteville, NC.
4 Reply
Justin Tahilramani
Rental Property Investor · Fayetteville, NC · Member since 2014 · 884 posts · 670 votes
6y
@Simon Obas - of course the sellers agent would say that. He doesn’t represent you. I buy homes without inspections all the time, but Ive also been doing this for 15 years. It’s a risk, you need to decide if you are willing to take that gamble or not.
6 Reply
Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
6y
He's not trying to deceive you, that is the current state of the market and it's risk for you to take. You can offer to do a safety only inspection addressing only safety and health items around the home or an informational only where you're assessing the property through the inspector's eyes but do not have the grounds to negotiate after inspection.
If you elect to use an buyer's agent, they will help guide you through these nuances.
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
It's a risk. If you find someone, you can still back out (usually, they could try to sue for performance, but I have never seen nor heard of this happening) you just lose your earnest money. If you are going to do this, just make sure it's a really good deal and you are confident the property is in good shape. It's riskier, but it's not necessarily a deal killer.
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Mark S.Pro Member
Rental Property Investor · KY · Member since 2013 · 1k+ posts · 539 votes
6y
I agree with @Edward Liu. Inspection $ is almost surely the best money you’ll spend. My inspections (on my turnkey rentals) always finds items that the seller repairs at their cost. This has always been more than the nominal cost of the inspection.
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Leo F.
Developer · New York City & L.I. · Member since 2013 · 79 posts · 29 votes
6y
purchased over 50 rental properties never had one inspection! If the deal is good and you don't want to lose it. I have been doing this 25+ years, there is nothing I haven't seen yet. If your new to the game though likely would suggest and inspecton
3 Reply
Grayson Spittel
Rental Property Investor · Wake Forest, NC · Member since 2017 · 128 posts · 131 votes
6y
@Simon Obas
Hey Simon - there is no doubt that you will get more offers accepted if you waive the inspection... however, there is also little doubt that you will miss things that cost you way more money in the future. My thought is that if the deal is good enough, the inspection isn’t going to be a deal breaker. If that is the go/no go, then it’s an easy decision to take what you learned and move on to the next deal.
0 Reply
Keith C.
Lender · Central Florida Markets · Member since 2017 · 137 posts · 135 votes
6y
@Simon Obas that’s like driving with your eyes closed .
2 Reply
Michael Noto
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
6y
@Simon Obas Do not take this the wrong way because I mean it sincerely, if you are asking this then you should definitely get an inspection. Especially since it is presumably an older multi family.
5 Reply
Parker Massengill
Real Estate Agent · Raleigh, NC · Member since 2020 · 38 posts · 15 votes
6y
It depends on your experience. If you have a GC you trust then bring them with you the first time you look at the property and let them check it out. In the Raleigh market, everything sells so quickly this is how a lot of investors do it because there's no time to wait and schedule an inspection.
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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
@Simon Obas your agent is correct that removing contingencies such as inspection, appraisal or financing can help get an offer accepted. If two offers are equal and one has no inspection contingency, of course the seller will pick the one that has less risk (no inspection). Of course just because waiving inspection is better for the seller, doesn't mean it is better for you.
Given that the property was fully rehabbed inside and out, I can't imagine the seller is extremely worried about an inspection. If they were worried, that would worry me. Keep in mind that fully rehabbed properties have problems. Sometimes the work wasn't done correctly or they didn't address certain problems to save money - like sewer issues. Even new construction properties need repairs in the first few years after construction.
The fact that you are asking us if you should get it inspected, tells me you should get it inspected. My advice is shadow the inspector and learn what they look for. As you gain experience, in the future may gain confidence to skip inspections.
Good luck!
3 Reply
Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
6y
@Simon Obas There are times when waiving the home inspection makes sense - and waiving it dramatically strengthens your offer. However, there are substantial risks associated with it.

In a red hot seller's market where properties are selling very quickly, with multiple bids and over asking price (which is much of the country right now), here's a strategy:

Be smart about the amount you're offering. In a market where properties are selling at 100% - 105% of asking with multiple offers (and assuming the property is properly priced), know that the lower you go below that range, the worse the chances of your offer being accepted.

Run the numbers on the property, assuming the worst. If the numbers still work, bring an inspector with you to your first visit. He won't be able to do a full inspection, but that trained set of eyes can spot things you might miss.

If it still looks like the right deal, submit your offer with the fewest possible contingencies, and if possible, none at all. Make a larger earnest money deposit, like $5,000 and make it non-refundable except for title issues. (You want an merchantable/marketable title, not just an insurable title).

If you do include an inspection contingency, shorten the time frame as much as possible and make it "for informational purposes only. Buyer reserves the right to cancel the sale based on inspection results but will not request repairs or ask for price concessions."

Ask when the seller would like to close and then meet that date if at all possible. Ask if there are any other terms that the seller wants, like you being responsible for a trash-out of a hoarder's former unit, demoing and removing a dilapidated garage or taking responsibility for overgrown landscaping.

And above all, make sure you have a robust pre-approval or better yet, proof of funds for a cash sale. Don't forget that HMLs will normally require an appraisal, making that offer weaker than a true all-cash offer.

Put yourself in the seller's shoes and then imagine what you could do to make the sale as easy as possible for that seller. Those are the things that will get an offer noticed and increase your chances of being accepted.
Of course, all this gets turned on its head if we ever flip back over to a buyer's market!
3 Reply
Steve Morris
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
Unless you're an expert on assessing building mechanics, I wouldn't do it. The downside is uncovering some major problems. I'd raise my bid with an inspection contingency.
0 Reply
Jason Meissner
Flipper/Rehabber · Pasadena, CA · Member since 2020 · 45 posts · 16 votes
6y
@Simon Obas just inspect it now before your offer, it gives you the appearance you need with buyers that you are serious and interested because you ARE thorough and motivated. Your offer will be the strongest because you know all the details up front. For a buyer your offer has a much better chance of a smooth on time close.
My GC’s ALWAYS say “get an inspection” even while they’re looking at it themselves. Then you give the report to the GC and then they have no excuse for not fixing and quoting everything.
Pro #1: Inspector says everything is good and you proceed with confidence and a good knowledge of what needs to be done.
Pro #2: Inspector says there are very expensive problems to be aware of and you avoid loosing money through a justified lower price.
Con #1: There are no cons if your offer is on time.
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Paul Shannon
Rental Property Investor · Fishers, IN · Member since 2016 · 337 posts · 470 votes
6y
Very risky to waive, as specially on a supposed "rehabbed" property. You don't know where the seller may have cut corners or put lipstick on a pig. When you buy a rehabbed property, you expect turnkey. If you waive the inspection, you forgo that expectation. Your agent should know better.
Now, if you buy a property and know ahead of time its going to be gut job, I think waiving an inspection makes sense. You already know everything is wrong with the property, so why pay someone to tell you that. As long as there aren't termite problems, excessive mold, or foundation issues (all fixable, but will blow your budget if you don't see prior to purchase), which the trained eye can spot, I'd assume the worst and budget for it, while waiving inspection.
1 Reply
Keaton M.
Austin, TX · Member since 2017 · 75 posts · 39 votes
6y
@Simon Obas
I did this with a 4plex in Austin where the market is very hot. It was my first property, I’m young, we were rehabbing it, I inspected it, and i was comfortable with my own inspection. New AC’s, new water heater, roof looked good, foundation looked good. We got into a bidding war AND took on more risk. I don’t plan on continuing this strategy because it is very risky but I’m ok with that right now. The property went on the market and closed within four days. I did what I thought I needed to to get my foot in the door. Also, don’t let other peoples posts make you feel ridiculous for asking this question. It’s a legitimate strategy that your getting more information about. Risky but legitimate. Best of luck! Also, I’ve had three service calls in the past year that we’re quite minor. It worked out for us.
2 Reply
Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
6y
The only time you waive inspection is when you are doing a 100% tear down.
A great rule of thumb for inspection is if you're asking if you need one, you need one.
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3 Reply
Michael Robbins
Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes
6y
The idea of waiving the inspection is simply to make it clear to the seller that you are not going to ask for repairs. Instead of "waiving the inspection" I would specify in contract that you are buying the property "as is." During your due diligence period you would still do a home inspection and if nothing crazy comes up then go forward. If the inspection reveals a deal breaker then you can still cancel the agreement.
6 Reply
Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
6y
@Simon Obas I believe you got your answer, but everything in a contract in negotiable. The less risk you put in a contract, the better for the seller. The more you are willing to give, or less you are wanting to take, financially the better for the seller.
You can waive inspections, but it is always a risk. Even moreso with a turnkey or renovated house, since you are paying top dollar assuming things are done right.
On a house I am rehabbing anyways, which is what I buy, I waive them on every property and always did. It is always a risk, and something I would not do on turnkey rentals. It means you will get less deals in this strong market, but also mitigates risk on your end.
0 Reply
Edward Liu
Palo Alto, CA · Member since 2017 · 230 posts · 200 votes
6y
When I first started investing, every deal seems a huge deal and I have minor anxiety and sometimes second guess myself, should I offer extra few thousand, should I offer as is as agent suggested, etc. So I can understand that as new investor, you want to finish the deal you have invested a lot of time searching for, you might think this is deal of lifetime given how long you have searched for.
After doing investment for a number of years, I no longer get into bidding wars - even some deals seems real good on paper. Stick with the number that works for me and walk away if necessary. There is always another deal waiting.
When you make an offer, there should be some line in the sand. Inspection is a line in the sand for me - even if I buy AS IS properties, I still dictate inspection period. I have walked away from many 'great' deals after inspection. It is purely risk management.
2 Reply
Steven McCutcheon
Real Estate Agent · Freehold, NJ · Member since 2018 · 115 posts · 49 votes
6y
@Simon Obas
I don’t recommend to my buyers to waive inspection because the seller might not be truthful/they also might not be aware of any issues.
With that being said, it’s your right to waive any inspections if you choose to. If you feel very comfortable with rehabs or are a GC and it doesn’t matter what’s wrong with the place then by all means go for it. The term no inspection might appeal to the seller but it’s so common to do inspections that it shouldn’t be a deal breaker.
1 Reply
Tyler Jahnke
Rental Property Investor · Oakland, CA · Member since 2016 · 341 posts · 643 votes
6y
Hey @Simon Obas - I'd say it's OK to waive it only if you are experienced and you have trusted connections on the ground. If not, I'd ALWAYS recommend an inspection. You never want to get caught off guard with a large expense that hits you out of nowhere.
-Tyler
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