Seller wants me to waive inspection

New to Real Estate · Vancouver, British Columbia · Member since 2022 · 157 posts · 86 votes

I have a duplex I offered on. It went under contract twice with both buyers backing out due to inspections. The LA provided both inspection reports, and to my very untrained eye doesn't look like anything major.

They will not accept my offer with inspection as they dont see a point of doing a 3rd inspection. But the way I make long distance offers is have my inspector and contractor walk it same day and talk over things that need to be done. Then get a quote from my contractor.

Im thinking if I forward these reports to my contractor and get a very rough quote. Maybe I can negotiate a lower price and waive my inspection. Is this a bad idea?

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Taylor L.

Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes

IMO yes, waiving the inspection would be a bad idea. Sure, you have previous inspection reports but there's no guarantee that those reports are the whole truth and nothing but the truth. The fact that it's fallen out of contract twice due to what was found on inspection should be a sign that something is up and you need the inspection contingency as well.

It's tempting to waive it to try to get a deal, the first rule of investing is don't lose money. One of the key ways we protect ourselves from losing money is a contingency based on physical condition.

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Taylor L.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
3y
IMO yes, waiving the inspection would be a bad idea. Sure, you have previous inspection reports but there's no guarantee that those reports are the whole truth and nothing but the truth. The fact that it's fallen out of contract twice due to what was found on inspection should be a sign that something is up and you need the inspection contingency as well.
It's tempting to waive it to try to get a deal, the first rule of investing is don't lose money. One of the key ways we protect ourselves from losing money is a contingency based on physical condition.
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Matt Devincenzo
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
3y
I've never completed an inspection on any property I've purchased. On rehabs out of State my Mom and contractor would walk it together and come up with a SOW, and that's what I need. On a heavy rehab there isn't much that I'm not taking care of already, and on a light rehab it's unlikely I'd uncover anything that isn't already immediately visible.
Waiving the inspection doesn't mean you can't have an inspection done, it just means you can't back out and get your EMD back because of it. Personally I'd waive the inspection, and then complete your process as normal with the inspector and contractor etc. Just make sure that your EMD is something you're ok losing.
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Gurjot Grewal
OP
New to Real Estate · Vancouver, British Columbia · Member since 2022 · 157 posts · 86 votes
3y
Quote from @Matt Devincenzo:

I've never completed an inspection on any property I've purchased. On rehabs out of State my Mom and contractor would walk it together and come up with a SOW, and that's what I need. On a heavy rehab there isn't much that I'm not taking care of already, and on a light rehab it's unlikely I'd uncover anything that isn't already immediately visible.
Waiving the inspection doesn't mean you can't have an inspection done, it just means you can't back out and get your EMD back because of it. Personally I'd waive the inspection, and then complete your process as normal with the inspector and contractor etc. Just make sure that your EMD is something you're ok losing.

Id be okay with losing the emd if it came to that. But my realtor told me if I was to get my own inspection and back out, i risk also getting sued for failure to perform. @Matt Devincenzo
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Kenny Smith
Real Estate Agent · Denver, CO · Member since 2022 · 356 posts · 228 votes
3y
@Gurjot Grewal
I am not sure how your contracts are written, but here in my US state of Colorado, the buyer has an option to select "specific performance" or not. I've never had my buyer check this box, because it leaves you susceptible to getting sued for not performing. Do you not have that option where you are located?
Also, I always HIGHLY advise my clients to NEVER buy a property without an inspection. I guess if you don't mind losing your earnest money, go for it. However, in this market, this time of year, there should be no reason why the seller would not allow this. Unless it is a smoking deal and they have other offers/high interest, I would push back. And to Taylor's point, it's already fallen out twice from inspection..there are multiple red flags here...
Best of luck!
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Benjamin AakerPro Member
Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
3y
You have both 'entire' inspection reports? Here are a few options:
1. Pay an inspector to go over them with you. Make sure they are complete. Two inspections should be enough. If satisfactory, why not waive the contingency?
2. The inspection doesn't cost anything to the seller but time. 'Not seeing a point of doing a 3rd inspection' is simply a tactic to get you to waive the inspection. Don't let that factor into your judgement. Make your offer with inspection contingency. If time is a pinch point for them then you have leverage.
3. It's unlikely that two inspectors have missed anything serious. You might want to dig into why they others fell out. There might be something the seller is hiding that is not on the inspections.
4. I've closed on properties and waived the inspection. This is a bargaining tactic. I give two options, one with inspection, another lower amount without inspection. I have already walked the property looking for high ticket badness, like foundation, HVAC, roof, etc. Sure, there are things I can miss, but these will hopefully cost less. REI is all about risk vs reward. If you are willing to take the risk of no inspection and the reward for waiving is a satisfactorily-reduced price, and you have the funds to pay for an unexpected repair, then go for it.
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Billy Daniel
Rental Property Investor · Russellville, AR · Member since 2014 · 684 posts · 509 votes
3y
It's odd that it's fallen out of contract twice due to inspections but the 2 inspection reports you have don't show anything major. Is there some part of the story missing? I can understand the seller not wanting to disturb the tenants, but I wouldn't buy without my own inspection....
4 Reply
Dominik Porobic
Realtor · Southern Maine · Member since 2020 · 24 posts · 19 votes
3y
If it went under contract twice and both buyers backed out I would be cautious... not many people would simply back out if it's not a serious issue(s). The last thing you want is issues that you have to fix with no tangible ROI. Sometimes it is better to be patient and wait for the right deal.
Also, not sure how thorough the inspector and contractor are, and neither have to look out for your best interest. Obviously, contractors want work and inspectors don't necessarily find everything. You should ALWAYS be present to walkthrough the property and get a feel for everything both inside and outside the property.
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Teri Feeney Styers
Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
3y
@Gurjot Grewal I would never advise a client to fully waive an inspection. However, I have frequently used this clause in writing offers for buyers and myself:
BUYER IS ACCEPTING PROPERTY “AS IS“ AND WILL NOT REQUEST REPAIRS OR FURTHER PRICE DISCOUNTS; BUT WILL CONDUCT AN INSPECTION AND DOES NOT WAIVE THE RIGHT TO TERMINATE BASED ON THAT INSPECTION
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
3y
Quote from @Gurjot Grewal:

I have a duplex I offered on. It went under contract twice with both buyers backing out due to inspections. The LA provided both inspection reports, and to my very untrained eye doesn't look like anything major.
They will not accept my offer with inspection as they dont see a point of doing a 3rd inspection. But the way I make long distance offers is have my inspector and contractor walk it same day and talk over things that need to be done. Then get a quote from my contractor.
Im thinking if I forward these reports to my contractor and get a very rough quote. Maybe I can negotiate a lower price and waive my inspection. Is this a bad idea?
Sounds like a trap. Tell them no dice.
2 Reply
V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
3y
Quote from @Teri Feeney Styers:

@Gurjot Grewal I would never advise a client to fully waive an inspection. However, I have frequently used this clause in writing offers for buyers and myself:
BUYER IS ACCEPTING PROPERTY “AS IS“ AND WILL NOT REQUEST REPAIRS OR FURTHER PRICE DISCOUNTS; BUT WILL CONDUCT AN INSPECTION AND DOES NOT WAIVE THE RIGHT TO TERMINATE BASED ON THAT INSPECTION

Why not just delete that bolded part part, but everything else keep? Why stop yourself from that option of a price reduction/discounts versus just terminating if you do not like it?
1 Reply
Kristina Anderson
Rental Property Investor · New York NY (brooklyn, ny) · Member since 2019 · 76 posts · 79 votes
3y
@V.G Jason
We have seen in our market that buyers elevate offer prices well over ask to get the deal accepted, then use the inspection to reduce the sale price. This is particularly true the last few years because properties have been way overpriced - again in our market (Columbus).
1 Reply
Trevor Naumann
Real Estate Agent · NY · Member since 2022 · 111 posts · 48 votes
3y
Depends on the numbers on the deal and how much cash your willing to throw at it. I would waive inspections if i knew i were purchasing a real "cash cow" because if the deal is objectively good enough fixing the mechanicals might still be worth it. On the other hand, if its a normal deal where your looking to hold for the long term and cash flow a bit try adding the cost of a new heating/cooling system and a roof on your spreadsheet. If its still something you can live with go for it.
On the due diligence side though i would want to know that people have been living their for a long time and that there is little turnover. The neighborhood has a low crime rate and is moving in a good direction economically. I would also check to make sure there are no geographic red flags in or near the property like cemeteries, power stations or anything that might make re-selling it hard in the event its more problems then you can take on.
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Jon A.
Investor · Brooklyn, NY · Member since 2022 · 158 posts · 118 votes
3y

I would only waive inspection if a) I knew everything structurally was sound and b) I planned to do a full gut rehab and replace everything already. The fact two buyers already backed out would give me pause... Perhaps the solution is just ask to do an inspection up front, before solidifying the deal? That's actually what we do in NYC - agree on price, perform inspection, then do contracts if we still have an agreement.
2 Reply
Ezra Henderson
Wadsworth, OH · Member since 2021 · 110 posts · 91 votes
3y
I often waive inspections as a negotiation tactic on properties built after the 70’s. But it is definitely suspicious that it’s fallen out of contract twice due to the inspection and the seller doesn’t want you to perform another.
Maybe you could call both inspectors and make sure the seller didn’t rip out any pages
1 Reply
Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Personal opinion: if it's fallen out of contract twice for information contained in the reports, then your contractor should be able to look over the reports and find what justified cancellation. Some buyers will nit-pick over wall color or they'll walk away from a $400,000 deal because of a $400 fix.
I would feel comfortable reviewing two full reports and making a decision based on that.
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Teri Feeney Styers
Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
3y
@V.G Jason The "no further repairs or discounts" would be used in a case where you are trying to be more competitive with multiple offers or trying to obtain a lower purchase price.
1 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
If you're considering buying a property that has already been under contract twice, it's important to be cautious. There must have been some issue or issues that caused both buyers to back out - and you definitely don't want to end up dealing with problems down the line without any return on your investment. It pays to be patient and wait for the right deal! Additionally, even if the inspector and contractor appear thorough, remember that they don't necessarily have your best interests at heart. To make sure you end up with a great investment property, make sure to always do your own walkthrough of the property inside and out. That way you can make an informed decision about whether this is really the right opportunity for you. Good luck!
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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
Don't see why you would need an inspection if there are already two. See what the issue was and why they backed out.
1 Reply
Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
3y
The only way I would even remotely consider not doing an inspection is if the reports provided were from inspectors I was going to use anyways.
I've had the same inspector go through a property twice and catch things the next time around.
You could go in and say, "we won't ask for anything that has already been disclosed." Or something to that effect.
1 Reply
Matt Greer
Real Estate Agent · Mesa, AZ · Member since 2017 · 230 posts · 169 votes
3y
A lot of investors will buy a house without an inspection, but they usually have enough knowledge or experience to see things when they walk the property. I'd at minimum get your contractor to look at the house before you go through with the purchase. Another thing that worries me is when a seller doesn't want you to perform an inspection. That's always a red flag for me. I'm fine with taking risk but when that risk can't be mitigated due to someone's outside influence I can't calculate that into my numbers.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y
Quote from @Matt Devincenzo:

I've never completed an inspection on any property I've purchased. On rehabs out of State my Mom and contractor would walk it together and come up with a SOW, and that's what I need. On a heavy rehab there isn't much that I'm not taking care of already, and on a light rehab it's unlikely I'd uncover anything that isn't already immediately visible.
Waiving the inspection doesn't mean you can't have an inspection done, it just means you can't back out and get your EMD back because of it. Personally I'd waive the inspection, and then complete your process as normal with the inspector and contractor etc. Just make sure that your EMD is something you're ok losing.

or just have a blanket 2 or 3 week due diligence and send your inspector in.. you dont need to have a reason why your not continuing if its done in the due diligence period.
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Jay C.
Walnut Creek, CA · Member since 2018 · 40 posts · 29 votes
3y
Sounds pretty red flag mostly the part of it falling out of contract twice and they the aren’t allowing inspections. The issue is you don’t know what inspections they are omitting. If u do move forward I would definitely get inspections but just shorten the period to a few days and def get foundation contractor, roof and general inspections. If they say no move on it is a buyers market soon/now depending on where u live/buy.
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Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
3y
All I want to see is the glaring issues in those inspections reports. Would be an interesting read. Rising rates may have scared off the previous buyers... could still be an opportunity.
We're positive that's how we bought our 3rd deal. Some issues can be easy and inexpensive fixes sometimes.
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James S.
Detroit · Member since 2018 · 27 posts · 19 votes
3y
Depends on your risk tolerance honestly. We've bought houses with no inspection as leverage to win. But not after two others walked post inspection. Could be various factors to why they walked.
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Dave Skow
Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
3y
@Gurjot Grewal- I would stick to your guns and continue with your plan ...if the LA and seller are not OK with another inspection - there is likely something amiss ...
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