MILWAUKEE - It’s a gamble many home buyers took over the last year: waiving their home inspection contingency.
In many cases, it was a necessary gamble to land a winning bid. However, with risk can come regret.
The Wisconsin Association of Home Inspectors tells Contact 6 it saw a dramatic decline in home inspections in 2021. William Braun wrote to Contact 6 about his recent home purchase.
"I was constantly looking at properties," said Braun of his search for a new condo over the summer. "Me and my wife went out, we fell in love with a [condo], by the time we got home, it was gone."
After four failed bids, Braun wanted his offer to stand out. So, he waived the home inspection contingency.
"When you waive that inspection things can move fast and they do move fast," said Braun. "Don’t do what I did."
Braun said there were extra costs he didn’t expect. He paid to replace the floors and carpets and paid for work by electricians and plumbers.
"I’m happy now after I redid it, but you should really go through inspection," said Braun.
The red hot real estate market of 2021 led to aggressive offers, thank to low inventory and an influx of buyers. Prices were up nearly 13% in the 7 county area in the third quarter, according to the Greater Milwaukee Association of Realtors (GMAR). In that climate, an offer over the asking price wasn’t always enough.
"We were seeing 10, 15, 20 sometimes 30 offers per house," said Courtney Stefaniak, real estate agent and chairperson for the board of GMAR.
Stefaniak says a waived inspection is appealing to sellers but risky for the buyer. It’s not something she normally recommends.
"I think it’s definitely situational, it’s going to depend on the house," said Stefaniak.
Waiving a home inspection means the buyer assumes all financial risk for any necessary repairs. Those repairs can add thousands, even tens of thousands of dollars, to the actual cost of the property.
Stefaniak says waiving the inspection is becoming less common this fall as the market cools off.
"It’s still a strong sellers’ market, but we’re seeing maybe 2, 3, 4, maybe 5 offers per house," said Stefaniak.
Stefaniak says an alternative to waiving an inspection is offering money toward needed repairs discovered upon inspection, such as $2,000 to $3,000.
"You can still have your contingency in there, but you’re saying, "I’m not going to nickel and dime and come back with a bunch of petty stuff," said Stefaniak.
David Kolesari of Homesight Inspection Services says over the last year, he’s done more post-closing inspections, which are for the homeowners’ information only.
"We’ve found chimney issues, roof issues, foundation issues. All of that is not cheap," said Kolesari. "When that happens, people are usually disappointed."
That’s why Kolesari invites real estate agents to attend his home inspection training sessions. He walks them through a house and gives them basic knowledge to help them help their clients. But, even with a knowledgeable agent, homebuyers should weigh the consequences before placing their bets.
"This is the biggest decision of your life," said Kolesari.