Over the past year or so, the Greater Boston real estate market has seen explosive growth in the number of multiple-bid scenarios.Â With an improving economy andÂ a limited number of homes available for sale on the market, buyers have been pursuing properties very aggressively.Â In some cases there may be 15-20 offers on a single-property with offers 10-20+% over asking price.Â Along with this, there has also been an increase in the number of buyers that are willing to forego some traditional contract contingencies such as home inspections, radon inspections, and mortgage contingencies to make their offer more attractive to a seller.
I think waiving the mortgage contingency, unless a buyer has enough assets to purchase without a mortgage, is very risky and akin to gambling with the 5% or 10% deposit.Â The radon contingency is a little less risky when waivedÂ since most of the time a radon remediation system in the area runs $1000.00 - $1500.00.Â But again, these are decisions that the buyer needs to make based upon counsel with their buyer agentÂ and / or attorney.
However, I do think that for a first-time or "non-professional" buyer (i.e.: someone that is not involved in real estate as an agent, developer, investor at least part time), waiving the home inspection is a potentially expensive contingency not toÂ incorporate into the offer, particularly when many sellersÂ don't supplyÂ a written "Sellers Disclosure" on what they know / don't know about the property.Â Issues and defects within a property that may not visible to buyers but would be discovered by a licensed home inspector can be very costly.Â So what happens when these issues pop-upÂ in the future and the buyer says "but I was told the seller wanted me to waive the inspection contingency".
Now, I am not a lawyer, but I have to think that in the near future we will probably seeÂ a number of legal cases brought against sellers where the buyer got the "winning" bid on a property because they waived the home inspection based upon the seller's agent telling the buyer and / or buyer agent something along the lines of "there are many offers on the property - the sellers like your price but you have an inspection contingency and others don't - can you do something about that?".Â
Whether there is any basis for a legal claim or not will be for the courts to decide, but why take the risk?
As an exclusive buyer agent, I'll continue to recommend to all my buyers that they have an inspection to protect their interestsÂ - I would rather them lose out on a bidding war than to buy a home that isn't right for them because of unforeseen repair costs.Â Â I would also challengeÂ listing agents to think about the downstream exposure for them and their seller clients when a buyer does not have a home inspection.Â Â I have begun to notice that some listing agents are very aware of potential downstream exposure (whether valid or not) and have taken the tone of "buyers are welcome to have a home inspection but the property is sold in as-is condition.Â The seller isn't going to renegotiate the deal based upon the inspection - the buyer will just have to make a go/ no-go decision after the inspection"Â Â I think that this is aÂ win-win situation for all since aÂ disgruntled home buyer faced with thousands of dollars in repair costs will certainly pursue every avenue for compensation.Â Â