Pass/Fail Inspections: What Does That Even Mean?!

If this past weekend has taught me anything, it’s that the spring selling season might be here sooner than we think. With inventory still at historic lows, we see more buyers entering the market earlier. Last weekend, I experienced offers that went $50K+ over asking, unlimited appraisal gaps, unlimited escalation clauses, and limited inspections. It felt like we were in the spring madness.

My jaw dropped as I spoke with agent after agent who had 80+ showings on their listing, 10+ offers in hand, and some folks waving inspection. So let’s talk about why you should NEVER waive inspection, but rather approach it from a different viewpoint!

Waiving your inspection means that you will not do an inspection and will move forward with the house regardless of any inspection problems. As you can imagine, this can get sticky fast. As a buyer, you want to do your due diligence to ensure that the home you purchase is what you want. Inspections are a big part of that process. Don’t waive your inspection unless you are a licensed contractor who can evaluate the house when you visit it. Instead, do a pass/fail inspection instead.

A pass/fail inspection clause is a great way to compete in multiple-offer situations. A pass/fail inspection is exactly what it reads. You still get to perform an inspection of the home, but you will either take it “as-is” or terminate the contract without losing your earnest money. That way, you know what the issues are and can decide if that is something you are comfortable taking on or not. Pass/fail inspections are the way to go if you are in a situation where you need to pull out all the cards.

Not only are pass/fail inspections a great tactic to be competitive, but sellers love them too. It is an excellent win-win for everyone. As the buyer, your earnest money is protected, and you still get to have an inspection to know what you are stepping into. Sellers love them because it limits and insulates them into having to do potentially costly repairs.

So, instead of doing something crazy like waiving your rights to an inspection, try going the pass/fail route first. It’s a safe way to be competitive without being stupid.