As we have seen in recent years here in the Lakes Region, when the need or demand for housing outpaces the supply of available listings, it presents a challenging and often frustrating road ahead for buyers. After touring countless properties and repeatedly losing hopeful bids against other competing offers, many buyers felt the need to up the ante, offering significantly over the asking price, or even waving home inspections, hoping to make their offer more attractive to a seller. Indeed, the highest bid often takes the cake. However, the second measure of waving home inspections can be a big, expensive mistake for a buyer: When a buyer chooses to pay over asking, they at least have a solid understanding of what their immediate housing costs will be. But if they wave inspection contingencies, they may inadvertently open a pandora's box of risk and uncertainty.

At a recent home inspection with Jon Bossey of ProSpect Property Inspections (www.prospections.com), I talked with Jon about the troubling trend of homebuyers waving home inspection contingencies in the purchase and sales agreement. He told me that in recent years, some buyers were opting for post-closing inspections instead, scheduled hours after receiving the keys to their new home. Any good home inspection will inevitably pick up on minor issues or needed repairs; even a brand new home will likely have a few problems to address or, at the very least, be aware of. However, in some unfortunate situations, a buyer would learn from the post-closing inspection report that the property had significant problems and latent defects. At that point, however, it's too late for negotiations: They already own the house, and now they have to deal with varying levels of buyer's remorse and unexpected expenses. While it is not a considerable financial cost to repair a gutter or to replace a single window if the seal has failed, replacing a failing septic system or a bad roof could be very costly. Similarly, a compromised house foundation, left unaddressed, can bring a cascade of repercussions, including serious safety risks and a significantly lowered home value. Improperly (i.e., unprofessionally) installed heating or electrical systems can also present a consequential safety risk, which can be very costly to remediate.

In today's era of HGTV and YouTube, "D.IY." tutorials on fixer-uppers and home improvement abound. However, a series of episodes or 15-minute tutorials pale in comparison to the many years of training a skilled or licensed professional undertakes. And yet, it happens all the time: A homeowner takes on an electrical project, and it is wildly against code, or they used the wrong type of insulation in a wall, leading to moisture and mold problems. Home inspectors will find these kinds of issues!

Some buyers have gotten creative in their purchase and sales agreements, stating that home inspections are "for information only," giving the impression that any unfavorable findings are not to be used for future negotiations. But this can be vague, confusing, and messy for all parties involved if an inspection finds significant flaws. We have also seen offers where a buyer puts a dollar amount on the home inspection contingency, stating that they will only negotiate on needed repairs over a certain amount of money. However, this can also be problematic because it is somewhat subjective: Two different service providers could give vastly different estimates of needed repair costs. Whose opinion will determine if the buyer is at risk of losing their deposit if they choose to walk away?

One interesting new trend is a "pre-listing home inspection." Greg Davis, the owner of ProSpect Property Inspections, told me that they have been doing more and more of these for sellers in recent months. This is one way for the seller to ensure disclosure of home deficiencies, potentially removing one layer of liability. It is not uncommon for a seller to forget to mention a past issue on a property disclosure or for them to write "unknown" as a response to questions about the home's mechanicals. The home selling process can be overwhelming, and that stress can occasionally lead to errors, omissions, or forgetfulness. Sometimes, as in probate situations, the seller is unfamiliar with the property and all its quirks. A pre-listing home inspection would hopefully bring forth any past or current problems a seller may not have recalled or known about when filling out the forms. Aside from liability, there is an added value in opting for pre-listing home inspections if you are a seller: It can help avoid big surprises further down the line when your property is already under contract. A home often carries the most enthusiasm and value the first week it is listed on the market. If it goes "under agreement," but the contract soon falls apart after a home inspection finds problems, significant market momentum is lost. Following a pre-listing inspection, the seller could fix problems before putting the house on the market or could price the property to reflect any needed repairs.

Buyers and sellers need to understand that home inspectors have limits to their level of expertise. In cases where issues discovered at a home inspection are beyond the scope of a home inspector's knowledge or qualification, the buyer or seller should consult an industry professional (contractor, roofer, HVAC specialist, etc.) to give a more specialized opinion. Buyers’ and sellers’ agents are often very much involved in bringing all these parties together and facilitating negotiations so their clients can make educated decisions.

All things considered, waving inspections has very limited benefits. A seller may think they are getting an easy path to closing, but it also leaves a door open to potential liability down the road. A buyer may think they will have the advantage over other bids if they wave an inspection, but as mentioned above, they are assuming significant financial risk in doing so.

Trends in purchase and sales agreements are going to continue to evolve as market conditions shift. An important thing to remember is that housing costs today are more expensive than they were in recent years. Unexpected and costly repairs can significantly add to that burden. One silver lining of the "cooling market" and rising interest rates we are all hearing about in the news is that, hopefully, we can all come back to a more rational appreciation of the value of routine home inspections.

This article was written by Heather West of Roche Realty Group. Roche Realty Group has offices in Meredith and Laconia, NH, and can be reached at 603-279-7046 or 603-528-0088. Please feel free to visit www.rocherealty.com to learn more about the Lakes Region and its real estate market.

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