Are Inspection Periods Killing Deals in Your Area?

Question

Multiple offers and highest and best offer deadlines are normal in the Pensacola Florida market, and have been for the last several months. But now, investor-buyers not only need to worry about out-bidding competition on price, sellers are also demanding that inspection periods be waived for fixer-uppers.

I guess it’s not all bad. Investors with the ability and confidence to walk into a property and accurately estimate rehab costs have a huge advantage in this market, but it looks like inspections periods are becoming deal killers – at least in hot markets.

Are inspection periods killing deals in your area?

Jill Addison · Answer

@Jeff Morelock I've been beat out on a couple deals in the last few months by buyers who waived the inspection. It just makes it so much more likely to close without having to come down on price that it's hard for sellers to resist that offer.

Matt Jones · Answer

@Jeff Morelock I haven't had to waive any inspections all together but I am advising buyers to shorten the inspection period in many situations.  I also discuss strengthening EMD, reducing or eliminating any seller concessions and writing their offer on an as-is contract.  For buyer's that are financing, having a strong pre-approval and a lender that is capable of closing quickly is important too.  In Pensacola my lenders can close faster than the survey companies can complete a survey in this crazy market.  Also, as the agent I try to make the offer as clean and streamlined as possible and I think it's very important to write your best offer up front in many situations these days to try and avoid bidding wars where you can.

In the Pensacola area market we are starting to see some things that you hear about in bigger markets and the west coast like agreeing to pay over appraised value, an increase in cash buyers and homes selling for way over the list price($70k on one that closed last week, that's unusual here) so maybe waiving inspections will be a necessity soon but I have several buyers under contract and none have waived inspections so far.  No offers on my listings this year have offered to waive inspections either.

I know several local wholesalers that require an upfront non-refundable EMD of about $5k which feels a lot like waiving inspections. Certainly that impacts investors here but that has been going on for a few years.

Jay Hinrichs · Answer

Yup in hot markets this is quite common to waive the inspection contingency and only do your inspections for your personal knowledge

Bill B. · Answer

I don’t see how inspection permits can be deal killers. They are usually 3-7 days so many other things are usually still going on past that. Otherwise bring a contractor or inspector with you when you look at it. Depending on the properties, just skip it. I’ve never used on in Vegas or my townhome in Mn. It just isn’t worth it.

I think it’s more likely sellers are getting sick of buyers offering list or over list to get the property under contract and off the market. And then coming back to re-bid their offer based on problems they “found” after making their offer. Assuming most sellers don’t want to go back on market and others buyers have moved along.

Peter Walther · Answer

Roll those dice.  Skipping the home inspection? Northern Kentucky couple has a warning (wcpo.com)

Chris Pasternak · Answer

I'm not an attorney but I would recommend not telling buyers to waive inspection deadlines.  This leaves the seller and their property disclosure the only thing available in court when they fail to disclose that foundation problem.  That will be ugly.  "Your honor, I felt pressured by my agent and the seller to waive my right to an inspection"

Instead, be sure to state an inspection is limited to such and such or for informational purposes only.

My advice is worth what you paid for it : )

Nick C. · Answer

Sellers can require no inspection periods right now as inventory is non existent and there’s buyers everywhere, especially on investment properties. It’s a smart move to weed out the wholesalers and tire kickers on the front end. Retail buyers should still get an inspection period.

Russell Brazil · Answer

Inspections are a no go in my market.

Dave Becker · Answer

Have you looked into wholesale properties in our area?  We have a large amount of people doing it and many properties come across each week.  I haven't seen that issue with those as of right now.

Are Inspection Periods Killing Deals in Your Area?

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