Managing the Risk of Waiving the Home Inspection

With the current state of the Ontario real estate market, it is no wonder why home buyers are rushing to purchase their first or next home. The old adage “location, location, location” has seemingly been replaced with the new and less catchy phrase “buy, buy, buy, and now.”  It is not uncommon for a single property to receive ten to twenty offers.  With such high stakes, there is a trend towards waiving most, if not all, conditions to ‘clinch the deal.’  The most commonly omitted and waived condition is the Home Inspection. Removing the Home Inspection condition can make an offer “clean,” but it’s a gamble for your clients.

If you think there’s is a possibility your client will have to waive the Home Inspection condition to make their offer competitive, explain it early and often. At your initial meeting, while viewing properties, in advance of making any offers, and certainly prior to waiving the condition.  Advising your clients of its importance early on will ensure that when the pressure’s on, and the clients are in a multiple offer situation, they will be fully aware of its benefits versus the significant risks associated with not having an inspection. 

Although your clients may ultimately want to waive the Home Inspection condition, you will need to explain to them that in doing so they could be leaving themselves with little to no recourse if defects are later discovered in the home. If your clients insist on waiving the condition, protect yourself by confirming your advice in writing and making sure that it appears as an amendment to the offer that is initialed by your client. Consider using an industry form to document your advice, as this will ensure consistency with other Real Estate Professionals.

As a Real Estate Professional, it is your job to explain to your client the consequences of waiving the Home Inspection condition – they will not be entitled to inspect the property and will not be able to void the agreement based on defects discovered later. Be very diligent in explaining the negative consequences of waiving the Home Inspection condition to your clients, and ensure you follow the risk management adage, “document, document, document.”

As always, it is a good idea to check with your Regulator for additional information on best practices.