The Huge Mistake Home Buyers Are Making During The Pandemic

Whether born of financial necessity or simply in an effort to escape highly populated areas, the COVID-19 pandemic has created a boom in the real estate market. Mortgage rates have been dropping, sellers want to close as quickly as possible, and buyers are flooding the suburbs and rural areas looking for more space. Add to that the flexibility of remote employment and you've got a market that transcends traditional geographic restrictions.

As the Wall Street Journal points out, this unprecedented demand combined with pandemic health restrictions imposed on "a high-touch process traditionally done in person," is creating a sloppier buying and selling process. Open houses and home viewing have gone completely virtual and in many cases real estate agents and their commissions are being bypassed. According to PureWow, in an effort to facilitate a quicker sale and prevent bidding wars, buyers are forgoing a crucial step in the entire process: the home inspection.

As Money explains, most real estate contracts include an inspection contingency clause for the buyer which allows them to procure the services of a professional home inspector in a specified amount of time from the date of offer acceptance. Based on inspection results, buyers can then renegotiate the price, back out completely, or request that the seller make repairs before the official closing. It's a safeguard most buyers would not want to overlook, but it does add time and expenses to the process that many people are willing to roll the dice on in this unusual market.

Waiving an inspection could have huge financial and in some cases health-related consequences

According to data from real estate brokerage firm Redfin, 20% of winning buyers from early this summer waived their inspection contingency clauses; those numbers are up 13% from just last year. That's about one in five buyers, and according to Karen Kostiw, a real estate agent with Warburg Realty in New York, the competitive market is driving this change. She explained to Money, "Sellers are receiving multiple offers — often significantly above the list price — and buyers are desperate to distinguish themselves from the competition. To do so, many buyers are waiving their inspection contingency in order to win the bid."

Saving around $400 and ultimately winning the bidding war might not be worth the consequences of skipping an inspection, however. As PureWow explains, there are plenty of structural and mechanical problems that buyers and their agents are not trained to see. From roof damage to plumbing problems or worse carbon monoxide and radon leaks, skipping an inspection could result in huge expenses down the road or worse, health problems for new, uninformed owners.

Bottom line, any seller that requires a buyer to waive the home inspection clause or any sale that comes down to a bidding war where the win is contingent on waiving the inspection might be a huge red flag in your search for your dream home.