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Should You Waive a Home Inspection in a Hot Real Estate Market?

Pros and cons to consider when vying for in-demand properties

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Mary O’Grady’s real estate agent had some disconcerting advice when she was looking to buy a house last year.

“She said, ‘If you don’t waive an inspection, your bid probably won’t even get considered,’ ” recalls O’Grady, 67, from Rochester, New York. “I had a huge amount of angst about that.”

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Home inspections can make or break the decision to buy a house. They unearth structural and equipment problems, roof issues, faulty mechanical systems and other serious defects.

Yet a hot real estate market has left O’Grady and many others passing up the opportunity to reveal such flaws. In fact, 27 percent of buyers waived inspections in July, according to the National Association of Realtors.

“I have never seen a market like this,” says Pat Ford, a real estate agent in Spring Hill, Tennessee, who has been in the business for 37 years.

Today’s home buyers are faced with a low inventory of homes, multiple competing offers and bidding wars that are driving up prices to record levels — especially in popular urban areas and adjacent suburbs. 

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Mary O'Grady waived an inspection and then found problems in her new home.
Courtesy Stephen Colby

O’Grady, who had 15 minutes to walk through the 1,800-square-foot Colonial she eventually bought, quickly found out her angst was warranted. Once she moved in, she discovered drips coming from the showerhead and the bathtub faucet — drips that leaked five gallons in 24 hours. The first repair estimate would’ve required taking everything out of the bathroom, including the original cast iron tub and fixtures, and came in at nearly $20,000. O’Grady eventually found someone who could do the job — for $5,000 — without touching the tub.

Though happy with her home overall, O’Grady was “devastated” by the surprise trouble and recommends that home buyers bring an inspector friend or someone else knowledgeable about houses to fully scope out a prospective property if they plan to opt out of an inspection.

“You have to be aware of the fact that there may not be honest sellers out there,” she says. “Or maybe assume it, which is not a great way to feel about people. But you don’t want to find yourself in this situation.”

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Inspection pros and cons

While demand has cooled some since O’Grady’s purchase, the market “is like an aircraft carrier — it doesn’t turn on a dime,” says Tom Matthews, a real estate agent in Concord, Massachusetts. “When it shifts, it shifts incrementally.”

High demand for housing continues to be driven by COVID-19 and millennials entering the market, according to Jessica Lautz, vice president of demographics and behavioral insights for the National Association of Realtors. Pandemic living and remote work is spurring people to change locations.

When it comes to home inspections and the possibility of opting out, home buyers have advantages — or disadvantages — depending on which state they live in.

Massachusetts, for example, where Matthews is based, is one of a few states that still follows a legal doctrine known as “caveat emptor,” a Latin phrase translated as “let the buyer beware.” This means that a seller is not legally required to disclose most property flaws, only known material defects, making such a big financial investment without an inspection particularly risky.

That said, waiving a home inspection makes an offer more attractive to sellers. (It is a seller’s market, after all.) With multiple buyers vying for a property, the fewer an offer’s hassles, the more likely it is to rise to the top of the heap.

Taking a gamble

spinner image a portrait of Pat Ford
Long-time real estate agent Pat Ford says the housing market is extremely competitive.
Courtesy Theresa Johnson

Another thing to remember is that a home inspection is not the only way to learn about a potential new residence. Matthews recommends doing due diligence by going to the town hall to check whether appropriate permits have been pulled in the past, checking with the local health board for any potential problems, and knocking on doors to ask neighbors for information.

And just because you waive a full inspection doesn’t mean you can’t get a condensed pre-offer inspection, which costs about a third of a full inspection and takes about a quarter of the time.

Says Matthews: “You have to be careful, because you’re dealing with hundreds of thousands, or millions, of dollars. Once you own the house, you own it. You can’t give it back.”

Bidding in this market can feel like gambling, especially with how easy it can be to get emotionally attached to a property.

“It’s similar to a poker hand,” says Ben Partridge, 70, a real estate agent in Richmond, Virginia. “You don’t know what the other offers are, but you’ve got to play your best hand and hope you get the house.”

Ford, the Tennessee real estate agent, understands that clients may waive an inspection because they fear losing out on a home they can already see themselves living in. But for those who refuse to do so, she has some encouraging words: “If you lose a house because you made it contingent, there’s another one out there for you. That’s the way I see it.”

How to Sell Your Home for the Highest Price — AARP

Robin L. Flanigan is a contributing writer who covers mental health, education and human-interest stories for several national publications. A former reporter for several daily newspapers, her work has also appeared in 
People, USA Today and Education Week. She is the author of the children’s book M is for Mindful.

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