The last year and a half has shown us unimaginable circumstances in many aspects of life; the real estate market has not been any different. The booming pre-covid economy sparked a fiery market all across the country. Builders were salivating at the notion of a home shortage in America and were positioned to capitalize on it in the coming years.
Fast forward 18 months—construction material shortages, over-inflated prices, and a reduced labor force have brought construction to a crawl. Compound this with the mass exodus from metropolitan areas around the country and you have set the stage for a gladiatorial arena of home buying. Buyers are stopping short of nothing to purchase the home they desire. It is not uncommon for buyers to waive all contingencies, appraisals, and casually throw down $150,000 over the asking price, in cash. These inordinate buying tactics have turned the market inside out.
In addition to bidding 150k over asking and waiving all contingencies and the appraisal, many buyers are choosing not to have a home inspection performed. Now of course, I own a home inspection company and my opinion may be biased, but even Realtor.com does not recommend you waive a home inspection.
So let’s look at some data of our own. From an inspection standpoint, a simple track home that is 5 – 30 years old will have 40 – 90 defects. Common defects are weathered paint and cracked caulking. On the grimmer side we consistently find water damage, mold, plumbing leaks, roof damage, electrical issues, and safety hazards throughout most homes. If you have the financial capability after you’ve purchased the home, you can perform maintenance and repairs on any issues once the deal is closed. Most defects we see are caused by small leaks that go unnoticed for years, the furnace that has never been serviced, or the roof that has never been maintained. These examples are fixable if you have all the information. The question is, do you really want to offer 150k over the asking price and not know what those 40 – 90 defects are prior to moving in? I didn’t think so…
So what are your options for home inspection when bidding high over asking and waiving contingencies?
A post-purchase home inspection covers everything a normal home inspection covers; however, it does not occur during the normal buying process; it occurs after closing. Every home will have items that need to be maintained or repaired, and now that you own the home, it is a good idea to know what those items are. A post-purchase home inspection will make you aware of any large issues that need immediate attention and will prevent small issues from turning into large expenses.
This conveys confidence to the sellers that you are moving forward with the purchase and that everything is on track. Every home inspection will uncover items that need to be maintained or repaired. Since the average buying period is 30 days, you will have time for contractors to get you on their schedule. Many of our customers will schedule repairs to be made after closing and prior to their move-in date. This creates a much more enjoyable living experience from day one.
But what if you are a buyer like most of us that does not have an extra $150,000 to bid over asking? How can you purchase the home of your dreams while protecting your investment and not overextending yourself?
I am not a Realtor, and I am certainly not a financial manager, but here’s my advice: if you are like most that have saved for years and years for a down payment and have a little savings left on the side, things must be navigated a little more carefully. Imagine buying a home and the next winter finding out the roof is on its last leg. After saving for years to buy the home of your dreams you are now forced to replace the roof and spend thousands repairing the leaks.
Depending on the individual situation that could be financially catastrophic. The first and most important step is to find a great Realtor. A great Realtor will make all the difference in your home-buying process. Next find a home inspection company that will allow you to schedule an inspection before writing the offer and can get you in within a few days. It also helps if the inspector can deliver the report on the same day. This will allow your agent to write a short contingency period and make your offer more enticing. This strategy will ensure that you are protected financially while still being competitive in the current market.
We have worked very closely with some of our best agents to come up with strategies that work for our clients. As a company we have decided to sacrifice maximizing our schedule and profit to better serve our customers and our agents. Our pre-offer scheduling program has given many of our clients the ability to get the home they want with the inspection they need. For more information on our pre-offer scheduling program visit our website or shoot us a call or an email.