Tactics for home inspection in a seller's market

Tactics for home inspection in a seller's market

We wrote a blog with general guidelines about Home inspections during the process of buying a home.  This is specific to Madison Wisconsin where we live and serve our clients, but could apply to just about any real estate market in the USA.

There is just one problem, in a market such as we have right now.  Putting an offer on a house in Madison WI with a home inspection will get your offer rejected in ANY competitive situation.    Certainly this is not all properties so how does one tell which ones?     This is one of the most critical jobs of the Buyer's representative and a very good reason not to go with the listing agent who is working for the home owner/seller and under no obligation to tell you what you need to know.  

Here are 2 tactics for treating the home inspection.  I have outlined when each might be used and some implications of both

When reviewing offers, home owners/sellers, are looking for an offer with the BEST price and the MOST liklihood to close with the LESS inconvenience.  An inpsection is not only a barrier for a successful close, it is also the largest point of renegotiation in the sale.  

When writing a competitive offer, we aim to take away reasons for the sellers to fear your offer.   

• When there is excessive competition for homes, the rules go out the window.  With some homes, the buyers need to be bold and waive inspections on order to win the offer.  And if you don't waive it you don't have a chance and so your agent will have you sign a disclaimer.   
• There is a risk, that there may be issues with the house. There are things that can be done to limit this possibility. Have a close look at the property,  to see if there are any obvious flaws.  Your experienced agent, though not an inspector and not qualified to perform an inspection can offer some help. Over the 30 plus years Real Estate Guy has been in thousands of homes and we have a pretty good idea of what looks good or bad and can help  in this instance.    Then, when writing the offer budget some repair funds.  
• For homes where there is a moderate amount of competition, the buyer may get away with an inspection while limiting seller's exposure with a cap of $1,000, $5,000, $10,000 or even more.  What this means is that you agree to cover the first dollar amount of any default the inspector finds!   The higher the amount, the more agressive, which is required as the competition heats up.  
• The way to look at this, is to again budget the amount you waive into the repair "account", and if nothing comes up in the inspection you are winning!   This tactic has the benefit of giving you coverage of an inspection and the home sellers, the reassurance that you will not call out every single crack and cranny for repairs.   
• A further tactic is make an inspection timeline so short that the seller is ok with the risk.  To do this we line up an inspection as the offer is written and so the inspcetion contingency timeline can be minimised.   I have actually written a 3 days contingency into an offer.   The tactic is to sell this inspection to the seller that the inspection will be quick and if any issues are found to cause renegotiation, then the seller can still go back to other interested parties, and in allowing an inspection, the would be absolved of much liability.  This tactic tends to work in Madison home sales, during the slightly slower months of winter when competition has historically been less intense. 

There are ways to mitigate the inspection that your professional can advise.  As experienced buyers agent, we can ask the right questions and ascertain the situation for that particular property.     Having a grasp of the competition enables us to advise you so you can navigate the offer to purchase and how agressive you need to be to "win".

This subject is quite complex, so if you are unsure, and need further clarification, don't hesitatge to contact us.  guy@realestateguy.net.

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