Buying February 9, 2024

Waiving Home Inspection vs “Inspection for Informational Purposes Only”

The following is a list of good reasons for a buyer to waive their home inspection:

  1. Never
  2. Waive
  3. Inspection

I’ll table the inspection of apartments for now, condo or co-op. They are a different category from a house on land.

In short, even if a client signs a form holding their broker harmless and indemnifies them from liability, I am uncomfortable with waiving inspections. Yet in the hot market of recent years I’ve seen buyers waive inspections fairly frequently to get their offer accepted by the seller. I understand the rationale. When I am on the listing side, that’s great for my seller client. But if my brokerage is representing a buyer, there isn’t a piece of paper in the world I am OK with a client signing holding my company harmless if they waive their inspection. The risk of not inspecting something as expensive as a house is too high to chance it.

There is a small exception if the buyer intends to dramatically rehabilitate or knock down a house. But in those cases the buyer is really more of a developer. Unless you are a contractor intent on significant renovation of a fixer upper, you’re absolutely nuts not to inspect. For Ken and Barbie buying their house that they’ll move into the day they close? INSPECT.

It’s not just a case of liability as a broker for me. I have a conscience. I am being paid to advocate for clients who will live in the home with loved ones and live their lives there. I could never live with myself if I sold someone a lemon or a money pit when my advice could have prevented them from that harm. I don’t care if it’s a brand new build covered in Saran Wrap and smells like vanilla potpourri. Professional eyes should be brought in.

As a brief aside, house inspections aren’t simply for finding defects, they are informative as hell and are almost a class in home maintenance. Some agents find them boring, but if you put your phone down and imagine yourself as the buyer, they can be fascinating.

In the past few years I have seen buyer agents quasi-waive the inspection with the carefully worded phrase “inspection for informational purposes only,” which suggests that the buyer will not object to anything discovered in the perlustration. I’m closing on a listing in a few weeks where the buyers stated that very thing. They demanded $60,000 off the price after the inspection. While I think that is pushing the envelope of rationality, they obviously didn’t waive the inspection. My sellers ultimately settled with them with some adjustments after discovery, and they weren’t happy about it, but ultimately they are protected too. New York is a caveat emptor state, and if the buyers tried to litigate over something after the closing, the sellers would have significant advantage from the fact that the inspection was completed, regardless of what the buyers promised.

What’s important to realize is that in Westchester and the surrounding areas, inspections are done before contracts are even sent out by the seller’s attorney. This is very different from just about everywhere else where they are the first contingency of the contract. I’m no lawyer, but it seems obvious that in the absence of a signed contract, either party can back out because nothing is signed. If I had a buyer who had an “informational purposes only” on their inspection contingency, they might be stuck.

I’ve been on both sides of this. I can understand why a seller would prefer an “as is” sale where the inspection is waived. But we also live in a world where people litigate, and as inconvenient as the inspection might be for the seller, it is also a defense for them if the buyers come after them later on after the title passes.

I look forward to a more balanced real estate market where buyers are not tempted to jeopardize their future just to get their offer accepted. For now, however, in a cartoonishly low inventory seller market, the discussion must be had.