It was a calculated risk but one that prospective homebuyer Kat Dodge felt she had to take.
"I kept bidding on houses where I came close but didn't win. I started looking in February and made offers on six places I didn't get," said Dodge, 28, a communications manager at the University of Minnesota. "Rates are going up and so's my rent. I had to make my offer more competitive."
After walking through a two-bedroom townhouse just hitting the market, she decided to change her game plan. For the first time, she made a bid that waived her right to have a home inspection.
"In this hypercompetitive market, not having an inspection is a way to entice the sellers to pick you," she said.
Home inspections have long been as much a part of a transaction as a "For Sale" sign in a front yard. But in the red hot market of the past few years, with many sellers choosing from multiple above-price offers, more deals are closing without this once-standard element of the sale process.
Experts weighed in on the pluses and minuses of the growing practice of skipping the home inspection, which has home inspectors, somewhat apprehensively, participating in emerging hybrid models of surveying a home.
To inspect or not to
Skipping the inspection is an option that Chris Galler, CEO of the 22,000-member association of Minnesota Realtors, advises against.
"We've recommended inspections for years and we still do in this market today. Inspections are a good value for consumers purchasing existing homes; new homes have warranties in place," he said.
Inspectors typically provide buyers with a written roof-to-foundation report that reviews and evaluates the condition of a home's interior and exterior structure, its safety and major systems — electrical, plumbing, HVAC. Inspectors spend a few hours on site, poking, prodding and casting their practiced eyes around the property. The inspection fee, which the buyer pays, is based on the size of the home.
According to Galler, the purpose of the inspection is not to detect every defect in the home but rather to provide the buyer with a realistic evaluation.
"An inspection educates the buyer about the property and that will help them be successful in homeownership. The report lets them know that the furnace or maybe the water heater or roof is fine today but in five years or 10 years they'll have to replace it," he said.
While it is ultimately up to the buyer to decide whether to make their offer contingent on an inspection or to forgo it, they often listen to the counsel of their real estate agents.
Realtor Tyler Miller, CEO of the Blaine-based Tyler Miller Team, explains to his clients that deferring the inspection can be used as a strategic tactic when writing a bid.
"You may be negotiating with the seller's agent who mentions they have several offers with the inspection waived. When we're up against that, to win we may have to waive it, too, or be willing to pay more if we don't," he said.
An inspection can reveal problems that the seller may not have been aware of, but once the seller has been informed about them they must disclose them to potential buyers. Miller said that's just one reason why sellers prefer that offers not be contingent on an inspector's report.
"It's a huge win for a seller to avoid the what if," he said. "Around the inspection, there's a time window when buyers can cancel for any reason including buyer's remorse. With no inspection, the seller accepts the offer, it goes pending and they can start packing."
Miller said some buyers seek peace of mind with new inspection variations that have recently emerged.
One is to make the process pass-fail. The buyer still gets an inspection but agrees not to use the findings to renegotiate the price or demand repairs up to a specified cap, like $5,000. With this option, the buyer preserves their right to walk away if a costly deal-breaker is uncovered.
The other evolution is a walk-through inspection, when the inspector accompanies the buyer during the showing and offers an on-the-spot verbal analysis.
"Not even a full inspection can catch everything, but a good inspector can see a lot during a one-hour mini or rapid inspection," Miller said.
Home inspector Jeremiah Anderson figures about a third of his business now involves these walk-throughs, which he performs for $125, less than half of what his full inspection report usually costs.
"I was against this at first, but I've come around. There is value in it," he said. "The buyer can ask about specifics and while I'm not a general contractor, I can answer questions about what's possible if they want to remodel."
Since starting JB Anderson Inspections in 1999, Anderson guesstimates he has performed some 5,000 inspections. But as fewer buyers have sought his reports, his business has dropped and he had to let go of two inspectors who worked for him.
He worries that waiving inspections is a desperate desperation move that will catch up with some unsuspecting buyers.
"People are in dire situations; they sold their home and are living with family or in a short-term rental. They want out so bad that they waive the inspection to get the deal," he said. "They're thinking short term, how do I get a house, not about what could come up that they don't have the money to fix because they spent so much for the property."
But Miller said he suspects that as the market inevitably cools down, which is already happening, the traditional inspections of old will again become routine.
"We're in uncharted waters," he said. "My team has probably sold 120 houses without inspections. To my knowledge, knock wood, we haven't had one buyer come back to say they got in a house with a lot of problems."
Inspecting the inspectors
Becoming a real estate agent in Minnesota involves testing, licensing and continuing education. None of that is required to become a Minnesota home inspector. Unlike in other states, in Minnesota there is no exam to pass and no state board to oversee or regulate home inspectors.
Several for-profit companies offer educational coursework and training to become a home inspector but there is no law that would prevent someone from starting a small business as a home inspector without any formal schooling.
The American Society of Home Inspectors (ASHI) is the professional association for the industry; ASHI Heartland, based in Minneapolis, represents about 90 home inspectors in Minnesota. To qualify for membership, inspectors must undergo a background check, pass a test and take continuing education classes. After performing 250 inspections as an associate, inspectors can become ASHI-certified and can use that to promote their work.
"It's important that consumers vet their inspector and don't just ask about the price," said ASHI-Heartland's president, Matt Butcher, who has been a home inspector for 19 years.
Butcher said that right now, inspectors have particular value in identifying a new wave of homes that look good until the surface is scratched.
"Nowadays the biggest issue is flipped houses. A DIY'er buys it to resell it quick and they're tackling projects they're not qualified to do," he said. "A good inspector can spot clues on poor work done by someone who learned on YouTube."
Kat Dodge is settling into her role as a first-time homeowner. Last month she finally made a winning offer and she closed on the southeast metro townhouse without having it inspected. She's busy sprucing up the space to bring it in sync with her style.
"I'm thinking about doing that fad of a geometric design on bedroom walls and maybe an interior lime wash in the bathroom," she said.
Dodge has found "no glaring issues" in her 25-year-old unit and said she isn't excessively worried about the soundness of its interior systems. Her review of documents from the homeowner association was reassuring about the building's exterior.
"I did what I had to do to get a place. First it was really saving my money and then it was waiving the inspection to sweeten my offer," she said. "I'm feeling pretty good about it, but we will have to see how it works out."
Kevyn Burger is a Minneapolis-based writer and broadcaster.