Should I Waive My Inspection Contingency?

Quick Answer

Forgoing a home inspection contingency is almost never a good idea. Whether the property needs minor repairs or has serious issues, knowing about them beforehand could help you negotiate a better price—or deter you from moving forward altogether.

A man wearing a blue shirt, hard hat, and safety glasses inspects the walls of a home.

An inspection contingency in your home offer contract tells the seller you won't move forward with the purchase unless you're satisfied with the results of a home inspection. If the inspection turns up damages, for instance, the inspection contingency gives you the right to walk away without losing your earnest money deposit.

In today's hot housing market, forgoing the inspection contingency might give you a leg up over the competition—especially if you find yourself in a bidding war. In February 2022, nearly a quarter of buyers waived the inspection contingency, according to the National Association of Realtors.

Forgoing a home inspection contingency is almost never a good idea, however. Whether the property needs minor repairs or has serious issues, knowing about it beforehand could help you negotiate a better price or deter you from moving forward altogether. In a highly competitive housing market, there are other ways you can sweeten the deal without giving up the inspection.

Risks of Waiving an Inspection Contingency

Waiving an inspection contingency can be an effective offer strategy, but it comes with risk. Homebuyers typically arrange a home inspection after the seller accepts their offer. HomeAdvisor puts the average price at $340, but it can be money well spent if it reveals hidden issues with the home.

During a home inspection, a certified professional will go through the property looking for safety risks and material defects that are visible—inspectors won't move things around to look for issues. You can expect them to examine the home's foundation and structural components, along with the basement, attic, roofing, floors, ceilings, walls, doors and windows. They'll also take a peek at the home's heating and air conditioning, plumbing and electrical systems. Most will then put together an inspection report that summarizes their findings. A thorough home inspection could uncover problems related to:

  • Termite infestation
  • Foundation cracks
  • Unsafe wiring
  • Worn-out roofing
  • Heating or air conditioning defects
  • Mold
  • Plumbing challenges

An inspector may recommend repairs that could add up to thousands of dollars. The average cost to replace an asphalt roof, for example, is $7,211, according to HomeGuide. After reviewing the inspection report, if the repairs are too costly you may decide to walk away. Alternatively, you could ask the seller to either drop the price or make repairs before closing the deal.

Skipping the inspection could put you into a house that turns out to be a money pit. According to Zillow data, one of the top regrets that homebuyers have is purchasing a home that ended up needing more work or maintenance than expected.

Alternatives to Waiving an Inspection Contingency

In a seller's market, it's still possible to stand out from other buyers without forgoing an inspection.

Waive the Contingency, but Complete an Inspection

Waiving the contingency doesn't prevent you from getting a home inspection. However, it does mean that you can't then ask the seller to reduce the price or make repairs based on the inspection's findings. You can still cut and run if the inspection doesn't go well, though you'll likely lose your earnest money deposit, which is generally 1% to 3% of the home purchase price (but can be more). It isn't ideal, but backing out may cost you less in the long run.

Get Preapproved for a Mortgage

Getting preapproved for a mortgage can put some muscle behind your offer because it shows sellers you're serious about securing the necessary financing. If a seller receives a lot of offers, they likely won't consider prospective buyers who don't have a preapproval letter. The preapproval process is fairly straightforward—the lender considers your basic financial information, including:

  • Income
  • Employment details
  • Debts
  • Assets
  • Credit information

If things go well, the mortgage lender issues you a letter summarizing your expected loan approval amount, interest rate and loan type. It doesn't guarantee that you'll get approved for the loan, but it provides an idea of what you can reasonably expect when you complete a formal mortgage application.

Offer to Pay a Higher Price

If you find a home you truly love and there's a lot of competition, increasing your offer could put you ahead of the pack. It comes down to your financial position. This is where getting preapproved can come in handy because it spells out your borrowing power. Keep in mind that just because you can borrow up to a certain amount doesn't mean you should.

You'll want to consider your estimated monthly mortgage payment, including taxes and insurance. Can your budget handle a higher offer price? If so, it could be an effective strategy that doesn't require you to give up the inspection contingency.

Make a Cash Offer

Those with the means to pay in cash will likely have more leverage when buying a home. For one, they're not dependent on a mortgage lender's final approval. They usually don't need to wait around for a property appraisal either, which is typically required when getting a mortgage. Time is also on their side: While it can take up to 60 days to get a home loan from start to finish, cash buyers can move things along much quicker.

It goes without saying that you'll need to make sure you have the means to make a cash offer. If it requires draining your savings or tapping into your retirement accounts, you may want to think twice. You could rob yourself of future investment returns and significantly deplete your nest egg. It's also wise to make sure you have three to six months' worth of expenses waiting for you in your emergency fund.

The Bottom Line

Waiving an inspection contingency is one way to potentially move to the front of the line when buying a home—but it isn't without risk. You could end up regretting the purchase if your new home requires costly repairs or unexpected maintenance. Getting preapproved, increasing your bid or making a cash offer are viable alternatives to giving up your inspection contingency.

Making sure your credit is in the best shape possible when preparing to take out a home loan will put you in a stronger position as a buyer. Free credit monitoring with Experian can help you do just that. It's also important to remember that mortgage lenders use certain FICO® Score versions when approving your home loan. You can unlock them with an Experian CreditWorksSM Premium membership.

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