Waiving the Inspection, Not the Risk
Post-Settlement Surprises Range From Minor Quirks to Huge Problems

By Mara Lee
Special to the Washington Post
Saturday, September 6, 2008

It's hard to imagine now, but just three years ago, would-be home buyers were rushing to meet sellers' deadlines for bids a day or two after the first open house.

"There's five offers, or 10 offers or 25 offers," remembered Robyn Burdett, a Re/Max Allegiance agent in Northern Virginia. "You had to present your best foot forward -- as few contingencies as possible."

One of the conditions you dropped when you bid on a house or condo was the right to a home inspection.

In 2005, "It was rare we had a home inspection," said Kris Feldman, an agent with Coldwell Banker who works in Bethesda and Potomac.

So what happened to those people who waived inspections?

An unlucky few found huge problems when they brought inspectors in after the deal was done. Many others found minor quirks that cost a few hundred here or there.

Colette Fozard, a legal assistant who lives in Hyattsville, bought her house in June 2005. She toured the house on a Sunday, and bids were due on Tuesday at 2 p.m.

She and her husband Chuck, a computer programmer, "talked a lot" about skipping the inspection. "We really thought about it Sunday night, Monday morning."

Fozard had owned a house before in Anne Arundel County, and because of that, she said, "I knew what I was really giving up."

She stopped telling friends that she had waived her inspection when she got sick of the responses: "What, are you nuts?"

She could have gotten an inspection for information only on the day between the tour and the bid, but work was hectic and she let it slide.

So they bid $320,000, $5,000 more than the asking price, with escalation clauses up to $335,000. They weren't the highest of the three bids -- that was $345,000 -- but that offer was contingent on the sale of the buyers' house.

"I consider us blessed. We haven't been bit by it," Fozard said.

Even though, as they have been working on the basement, they have discovered a problem or two, such as a cracked joist under the old plywood ceiling. An electrician they hired added a few needed circuits.

"We're very happy," she said.

Homeowners such as Fozard may be fine with their decisions of a few years ago, but the inspectors who were pushed aside tell scarier tales, not surprisingly.

Gary Marsengill, owner of Absolute Home Inspections in Northern Virginia, said some sellers who waived inspections during the boom call him to inspect the house now, as they prepare for sale. Some houses are relatively clean, with minor cracks or deck flaws that aren't urgent. But others have wet basements or foundation problems.

Reggie Marston, owner of Residential Equity Management, an inspection company in Springfield, said the trend started in 2004, but accelerated in 2005 -- his business fell by 24 percent because it was so common for buyers to skip inspections that year.

"People didn't just waive home inspections, they waived termite inspections. They waived everything, including the kitchen sink," he said.

"There were a lot of consequences," he said. The worst case he has seen was that of a woman who bought a rowhouse in Northwest Washington for $80,000 more than the asking price. The back yard had elaborate landscaping and ponds, and the pressure of all the added fill dirt was causing the foundation to shift. The house had more than $30,000 in structural damage, including termite problems.

June and David Yoon bid on a house in Potomac in March 2004, before the house was listed. They were one of three families touring it before the price was even set.

June Yoon said their real estate agent told them: "Put a contract in tonight if you're serious about it." They estimated the listing price would be about $1 million, and so they bid $1.15 million. The seller accepted.

Yoon, a stay-at-home mother, said they were scared to waive the inspection, but that everyone else was doing so. The couple had previously owned a townhouse in Rockville, and she remembered the inspector found pages and pages of minor problems there.

Their five-bedroom house -- the couple have four children, ages 11 months to 9 years -- has had a number of post-purchase surprises. The first 18 months after they moved in, water leaked around the chimney because caulk was missing on the roof. The next spring, buckets of water poured through the drywall in the dining room, and they spent a few hundred dollars to repair the roof.

When they recently replaced laminate countertops with granite, workers discovered there was no insulation around the windows.

"We have no regrets," Yoon said. "My oldest was starting kindergarten in the fall. We had no choice, we felt."

But Michele Massey did have a choice about getting an inspection. By the time she bought in February of this year, the balance of power had shifted from sellers to buyers. Instead of an escalation clause, she offered $10,000 less than the asking price of $460,000 for her Springfield townhouse.

Massey, 38, had owned houses four times before, and had inspections on each one. The inspections never found anything, she said.

She was cynical about inspectors' independence, and decided it would be a waste of $300 to hire one.

Boy, is she sorry.

The townhouse has a consistent problem with mice, and she bought a new stove right away because the old one smelled of mouse urine.

There was a broken pipe in the furnace room, significant water damage and a mold problem. "An inspector totally would have caught that," she said ruefully.

Another pipe burst in the basement. She had to replace drywall, and hire a company to dry out the carpet.

Several of the light fixtures spark. A termite inspector found what he believes is a structural crack in the basement.

"I'm probably $5,000 in debt I didn't plan on," she said. "This has led me to have to get a roommate."