Tips for Buying a House without an Inspection

[bdh]

Hello All,

Does anyone have any tips for buying a home without getting an inspection? The Mrs and I are getting ready to look for houses in the San Francisco Bay area, and with the insane housing market here almost everything seems to get sold as-is. There's typically no opportunity to have your own inspection done if you want an offer to be accepted. Sometimes (though it seems rarely) the seller will have an inspection report available at an open-house, which is better than nothing, but I'm not sure how much I'd trust a seller-hired inspection.

Anyway, given how much you have to spend on housing around here the potential of having to drop another 100k on major structural repairs or whatever terrifies me. Does anyone have any good resources (books, websites, etc.) or tips for learning about major red-flags to watch out for. Ideally something that goes beyond the basic "cracks in the foundation can be bad" type stuff and gets more technically in depth would be awesome.

Thanks!

 

[JONNYROTTEN]

As a contractor my entire life I can say identifying a problem depends on your skill level.
I can also say reading a book or watching "to catch a contractor" type shows isn't going to get you anywhere.
Pointing out a problem that you just read in a book will basically make you look like an ass....because you don't the reasons why something is done a certain way and for what reason.
It cant hurt but if someone comes back at you after you bring something up most likely you will look at them and say " OK" not having a clue why.

That being said I've seen lots of "inspector" reports. They're very general most of the time...pics inside the attic, a sheetrock crack you can see yourself....Personally I think inspector repots are a bit of a joke...there general inspections buy someone who is not specific to any trade.

I know a few personally. Most of the time they're referred by the listing agent. So they need to find a happy balance between not pissing off the people that are giving them work and justifying their payment buy finding something wrong

 

[mirthfuldragon]

I paid for 3 inspections at $500 a pop (and 40+ pages each), and I saved myself from two big mistakes. And my father is a master machinst/electrician and my grandfather was a carpenter, so I have a good idea what I am doing (or at least I think I do ).

One thing you can look at is electrical: is the panel newer, how many blank spaces are there - if there are only 1 or 2, that means the electrical has not been upgraded in at least a decade, which is a sign of neglect. Power requirements have been jumping over the last two years - my house has 60 amp service (since 1955), and the modern standard is 200 amps in my area, and some major McMansions are going to run up to 400 amps.

Buy one of those plug-in outlet testers as well and check random circuits and all the GFIC outlets.

The next thing I would look at is water travel - check near sinks and showers to see where the water is traveling to and from. An unnoticed drip over years will destroy flooring and can rot through structure. Also look at gutters and downspouts - if someone cares for their house, the water will be directed away from the foundation and will have some thought put in to how it flows.

Things to ignore:
Stainless steel appliances. Who cares? A $4,000 kitchen suite should not influence a $400,000 purchase.
Surface mold in bathrooms - it happens. If the drywall is not soft, then it should be okay generally. A humidity-sensing bath vent fan is a great investment.

Don't get distracted by the shiny things - a new coat of paint can hide all kinds of bad things. My favorite part of my house is the 1970s chic basement with shag carpeting and wood paneling - ugly as sin, but it meas that it has never flooded since the horrendous orange carpeting was installed, probably before I was born.

Also, the Bay area is just nuts in real estate. I would consider looking elsewhere and relocating. Even if you take a huge paycut, you can probably have a higher standard of living in a lot of other places.

 

[Hoppy2bmerry]

Are you handy? I bought an old house and it appeared that things like he electric system were updated, but when we started to do some updating we discovered tube and knob system still in use... Parts that were seen had been updated. I don't know if an inspector would have caught that, maybe if they took a light fixture apart they could have. (Didn't have an inspection at the time). What you see might be helpful, and if you smell mold should be a red flag. Sometimes older homes have asbestos shingles under the siding, an issue if you want to renovate or add on. Perhaps if you see something you like a deposit can be made and be refundable if the inspection shows extraordinary problems. I'm in NY laws are different, but older homes can become the money pit and an inspection might save you from that, or at least you go in with your eyes open.

 

[Toejam792]

Look for spongy anything. Do the floors sag when you walk on them, open the cabinets is there any water damage. If there's a basement look at the floor joists what kind of shape are they in, knock on them rotting wood sounds different than good wood. Check the wood around the bathrooms for rot. I don't think if the electrical has not been updated in the last 10 years it would be neglect, as long as the service is adequate for the load and the wires are in good shape your good. I would figure in remodeling costs if the main circuit is under 150 amps or it still has fuses.

 

[bdh]

As a contractor my entire life I can say identifying a problem depends on your skill level.
I can also say reading a book or watching "to catch a contractor" type shows isn't going to get you anywhere.
Pointing out a problem that you just read in a book will basically make you look like an ass....because you don't the reasons why something is done a certain way and for what reason.
It cant hurt but if someone comes back at you after you bring something up most likely you will look at them and say " OK" not having a clue why.

Yeah, just to clarify, I'm not planning on quibbling with someone who knows what they're talking about just because I've read about it for a few days on the internet. The big problem here is a lot of houses go from being listed to having a signed contract in under 2 weeks. I think a realtor we were talking to said for most of the neighborhoods we were looking at 8-11 days was the average. Because stuff goes so fast and it's such a seller's market you never really get the chance to have someone qualified look at the place, so I'm really just trying to learn how to spot the major red-flags that should make me walk away from a place if possible. Lots of the neighborhoods we're looking in were built maybe 1930s or earlier, and with how quickly prices have been going up here you can get a lot of wanna-be flippers who just do some basic cosmetic work but ignore major issues with the house.

 

[JONNYROTTEN]

Yeah, just to clarify, I'm not planning on quibbling with someone who knows what they're talking about just because I've read about it for a few days on the internet. The big problem here is a lot of houses go from being listed to having a signed contract in under 2 weeks. I think a realtor we were talking to said for most of the neighborhoods we were looking at 8-11 days was the average. Because stuff goes so fast and it's such a seller's market you never really get the chance to have someone qualified look at the place, so I'm really just trying to learn how to spot the major red-flags that should make me walk away from a place if possible. Lots of the neighborhoods we're looking in were built maybe 1930s or earlier, and with how quickly prices have been going up here you can get a lot of wanna-be flippers who just do some basic cosmetic work but ignore major issues with the house.

Yea...That's scary. If people are flipping homes left and right in your area there is a good chance things are being covered up that an inspector will never see. It's a crap shoot. I would be more comfortable buying an outdated house from the little old lady down the road that did nothing to the house. You'd get a better deal and know what your getting....but that's me.....good luck...nerve racking to say the least

 

[NSMikeD]

Talk to your lawyer about the risk of buying home without an inspection and what exactly "as is" means since most contracts state what is in good working order. I presume your lawyer is experienced.

At the least, you want to know how much money you need to sink after closing to bring the house up to code and satisfactory condition for you, and I think it's prudent to know when to walk away.

A good inspector will know what to look for and how to not screw up a closing with petty issues.

 

[jschein]

As is = buyer beware.
If the market is that hot that they are selling as is it means something.
We sold my deceased inlaws home as is but it took a few months. Our reason for as is was we had to pay the taxes, 25k per year. This might be the sellers motivation. Or there are serious issues they know of. We knew the house needed major upgrades to sell in the area which we could not afford. A general contractor gave us the asking price, pumped a bunch of money into it and made some serious coin. Also, check the local real estate taxing authority and see what the last sale was and the price. This will give you some indication of the viability of the house.

 

[bfish]

Foundations, electric, and previous water damage are the big 3, but also termite damage and HVAC (especially if power is off) can be expensive too.

If you really like the house, you can always do an inspection between signing and closing. You are only out earnest money and the inspection cost, if the seller doesn't negotiate. On the properties that I have had inspections, it has always been done that way. Around here, closings are at least 15 days after signing the purchase agreement and usually 30 plus days, even though the house goes "off" the market around day 10.

On the properties that I didn't have an inspection, I have always had a general contractor go through and preform their own through inspection before bidding but I didn't have time constraints.

You can also check records of ownership in most areas at the court house (or online). If the latest owner has only had the house for a short while, it is a flip. Also if the owner has lots of properties, but owned this one for awhile, it probably has been a rental (and you should assume with lots of cheap repairs).

 

[jschein]

Foundations, electric, and previous water damage are the big 3, but also termite damage and HVAC (especially if power is off) can be expensive too.

If you really like the house, you can always do an inspection between signing and closing. You are only out earnest money and the inspection cost, if the seller doesn't negotiate. On the properties that I have had inspections, it has always been done that way. Around here, closings are at least 15 days after signing the purchase agreement and usually 30 plus days, even though the house goes "off" the market around day 10.

On the properties that I didn't have an inspection, I have always had a general contractor go through and preform their own through inspection before bidding but I didn't have time constraints.

You can also check records of ownership in most areas at the court house (or online). If the latest owner has only had the house for a short while, it is a flip. Also if the owner has lots of properties, but owned this one for awhile, it probably has been a rental (and you should assume with lots of cheap repairs).

This reminds me, oil tank. Ours was filled in the 70's and deemed not an epa thing. The inspection and removal cost 1500 but if there was leaking some in the same town paid well over 30k.
Always ask about an oil tank!

 

[deprecated]

There's typically no opportunity to have your own inspection done if you want an offer to be accepted.

Wow, that seems crazy.... Do you guys out there not get to test drive cars before you buy them?? (Ok, terrible analogy.)

About the only thing I have to offer is be as patient as you can and find one that has had a recent inspection or one that you can get an inspection on.

Good luck!

 

[bdh]

Are you handy? I bought an old house and it appeared that things like he electric system were updated, but when we started to do some updating we discovered tube and knob system still in use... Parts that were seen had been updated. I don't know if an inspector would have caught that, maybe if they took a light fixture apart they could have. (Didn't have an inspection at the time). What you see might be helpful, and if you smell mold should be a red flag. Sometimes older homes have asbestos shingles under the siding, an issue if you want to renovate or add on. Perhaps if you see something you like a deposit can be made and be refundable if the inspection shows extraordinary problems. I'm in NY laws are different, but older homes can become the money pit and an inspection might save you from that, or at least you go in with your eyes open.

I'm fairly handy and not afraid of DIY for a fair amount of stuff, but yeah, stuff like asbestos abatement I'm obviously not going to do. Electrical doesn't bother me for doing a circuit or two, but rewiring house is definitely more time than I want to spend.

Yeah, I need to check what's possible/standard in CA. I think it can be similar where if something really major pops up in an inspection after the offer is accepted and signed you can still potentially back-out but might lose your good-faith deposit (1-3% I believe). I also think you can put in a clause that gets you your good-faith deposit back if something really big pops up in inspection, but I'm not sure how standard that is.

 

[ebstauffer]

Often a lender will not approve w/o inspection.

 

[Jaybird]

Hello All,

Does anyone have any tips for buying a home without getting an inspection? The Mrs and I are getting ready to look for houses in the San Francisco Bay area, and with the insane housing market here almost everything seems to get sold as-is. There's typically no opportunity to have your own inspection done if you want an offer to be accepted. Sometimes (though it seems rarely) the seller will have an inspection report available at an open-house, which is better than nothing, but I'm not sure how much I'd trust a seller-hired inspection.

Anyway, given how much you have to spend on housing around here the potential of having to drop another 100k on major structural repairs or whatever terrifies me. Does anyone have any good resources (books, websites, etc.) or tips for learning about major red-flags to watch out for. Ideally something that goes beyond the basic "cracks in the foundation can be bad" type stuff and gets more technically in depth would be awesome.

Thanks!

Inspectors (my dad, 30+ years in the business) are normally just people with a boatload of experience in the construction field. WE (My dad and I) did the inspection on my first house and WE (my dad and I) did the inspection on my second home. Personally I wouldn't buy a house without having a reputable inspector look it over, test everything AND give a full report. It's just not worth the headache later on down the line. They are going to point out all structural issues and potential issues like mold, dry rot and a bunch of things people can HIDE but an inspector is going to find. IF THEY ARE GOOD! I don't know man! I would get the inspection.

Just a few .02 worth.

Good luck!

Go watch the money pit with Tom Hanks and THEN go house hunting..LOL

Cheers
Jay

 

[bdh]

Often a lender will not approve w/o inspection.

Right, so just to add some specifics, you still typically get the inspection done between the offer being accepted and closing, but since most houses get 5-10 offers people are now making offers with no contingencies on the inspection just to make their offer more competitive. So, you can still back out of the deal before closing if something major pops up on inspection or the lender refuses to fund due to the inspection, but then you're out the good-faith deposit you made when the offer was accepted (which is typically 3% of the sale price in CA).

I'm not a real estate lawyer obviously and we're not super far along in the process yet, so what I'm saying may not be 100% true all the time, but I think is how things typically go around here from what I've heard.

 

[bleme]

Just because everyone else there is wacko, doesn't mean you have to be also. I'd never roll the dice with 30 grand on the line. I don't do Vegas either...

 

[bob1852]

Right, so just to add some specifics, you still typically get the inspection done between the offer being accepted and closing, but since most houses get 5-10 offers people are now making offers with no contingencies on the inspection just to make their offer more competitive. So, you can still back out of the deal before closing if something major pops up on inspection or the lender refuses to fund due to the inspection, but then you're out the good-faith deposit you made when the offer was accepted (which is typically 3% of the sale price in CA).

I'm not a real estate lawyer obviously and we're not super far along in the process yet, so what I'm saying may not be 100% true all the time, but I think is how things typically go around here from what I've heard.

I, personally, would never risk losing earnest money by signing an "as-is" contract if there was any indication that financing wouldn't go thru as the result of an inspection.

I'd be very specific with stipulations in the contract on how this would be handled.

Most major cities are going through major hosing booms right now, and it's creating a "buy now or get lost in the dust" hysteria (eerily reminiscent of ~2005)....

Don't buy into the hype....

 

[bdh]

You are only out earnest money and the inspection cost, if the seller doesn't negotiate.

Unfortunately for CA I think earnest money is typically 3%, and for SF bay area prices that's a big chunk of change. We're just getting started in the process here, so I'm not sure how much is negotiable in this area. People get so many offers on a house so quickly that it wouldn't surprise me if a seller would just be happy to take the earnest money and relist the place, but these are things we still need to clarify with an agent and/or lawyer.

 

[Sailingeric]

I work in the mortgage industry so I can offer some advice. You make your offer subject to certain conditions- such as acceptable financing, the home appraising at at least the purchase price, and subject to an acceptable inspection. The home may be sold as-is but that does not mean you are prohibited from getting an inspection done. I would not risk it without an inspection. But before you do spend the money on an inspection, look the home over for anything glaring- water damage, a roof that looks bad, damaged windows/ siding. Spending a few bucks will save you a lot. I had put in offer on a home a few years ago and the inspection was fine other than the entire crawl space was flooded, so I walked away.

 

[Sailingeric]

Often a lender will not approve w/o inspection.

that depends on the type of financing but if there is damage or repairs needed that the appraiser notes as needing to being done to support the value or livability of the home, the lender will require that to be done.

 

[CGVT]

I work in the mortgage industry so I can offer some advice. You make your offer subject to certain conditions- such as acceptable financing, the home appraising at at least the purchase price, and subject to an acceptable inspection. The home may be sold as-is but that does not mean you are prohibited from getting an inspection done. I would not risk it without an inspection. But before you do spend the money on an inspection, look the home over for anything glaring- water damage, a roof that looks bad, damaged windows/ siding. Spending a few bucks will save you a lot. I had put in offer on a home a few years ago and the inspection was fine other than the entire crawl space was flooded, so I walked away.

This^^^ I've moved all over the country and have never heard of market where you couldn't get an inspection as a condition of the sale. That doesn't mean the seller has to fix anything, but you know what you are getting into and can make an informed decision on a purchase. Do you have a buyers agent? If not, get one, even if you have to pay his fee yourself.

If the seller won't accept your offer pending inspection, walk away.

 

[VApatriot]

I agree with what CGVT said. Let me get this straight. So you want me to buy your house full of problems and not know what I'm getting into??? Hahahahahahahahahaha. That's really funny! I would never buy any house whether it's new construction or a hundred years old without an inspection. Just remember that old saying, "a fool and his money are soon parted".

 

[agrazela]

Real estate is crazy here in urban-ish/suburban California when it heats up.

One problem is that it's not just other regular ol' working folks and families who have to take out loans that you are competing with, it's also BIG CASH from foreign sources that swoop in and "steal away" the properties, whether as a short-term flip-it or a longer-term rental investment property.

You almost have to find a listing where there IS some kind of contingency on the seller's part--for example, they're moving to a new house that isn't quite finished yet, can you commit now but can't move in for six more months? (Flipper-types are usually NOT interested in that, and many families won't/can't do that either. This really cuts down on the competition, and this is how we beat the "heat-up" back in 1998.)

I assume we're talking about a house, with a yard? Not a condo or somesuch? And not some outlying PUD with a two-hour commute? I don't know if it has any bearing, but remember that out here, unless it's some sort of "historic home," the lot is 90% of the value of the listing. If a wildfire destroyed MY house, it'd probably be doing me a favor

 

[GilaMinumBeer]

Sounds to me like OP is expecting to get an inspection in prior to making an offer. If that is the case, I've never heard of such a thing.

You make an offer. Sellers accepts. Contract is written placing conditions on approval. One of those conditions is an inspection. "As is" does NOT prohibit a potential buyer from an inspection. It does stipulate the position of the seller. You either buy the house as it is, regardless of inspection results, or you don't. The inspection help the buyer decide if the "as-is" condition is worth the selling price.

Typically, an inspection happens after the offer is accepted and the seller must make the agreed upon repairs (or reduce the asking price) prior to closing.

 

[kh54s10]

I would think that "sold as is" does not mean that you cannot have it inspected. It means the owners are not going to fix things prior to selling.

If you are getting financing I am almost certain they will require an inspection. Both times I bought it was required. The financial institution might not require everything found to be fixed but if there is anything major, they will not lend the money.

I certainly would not buy without an inspection. Any major problems might require a price change.

 

[JonM]

I could be wrong, but sold as is around here means with no representations or warranties from the seller, I.e., we're not filling out a disclosure form to tell the buyer what we know about the building's condition. Sometimes that means "Grandpa died, we inherited it and we don't know anything about the house," other times it means "this place is SO f'ed up that we're not going to stick our necks out and make representations about it, lest we get sued for making a misrepresentation."

Either way, "as is" around here means DO get an inspection.

 

[jrgtr42]

We sold a couple houses that were in my wife's family for 50+ years each. They both needed a lot of work - part of why we sold them.
We specified that they were being sold as-is. And we priced them accordingly. Both were livable, but... tired. Old insulation, wiring (nothing dangerous) etc etc.
We had one buyer offer way more than the asking price, then he started to nit-pick, saying he'd need to do this and that, and wanting $10K off for this, $5K off for that and so on.
We refused, stating that it was as-is, and went with the next offer.
We never refused a buyer wanting an inspection, but reiterated that as-is, priced accordingly and so on.
AFAIK, one of the buyers did a full-on, to the studs rebuild of the house, and it's gorgeous now (we drive by once in a while for curiosity, and it's not out of the way) the other did some updating.

 

[mongoose33]

If you don't understand house construction or what can go wrong, then you should have it inspected. Not sure why you wouldn't want that, especially if you're pouring tons of money into something expensive.

I've bought and sold many rental properties; toward the end of my career doing that I could assess a house pretty readily. I always looked for signs of settling (cracks in corners or at the ceiling/wall junction), doorways that weren't square, doors that wouldn't shut right, floors that weren't level, signs of water in the basement, other water issues, etc. Usually a warning sign to stay away.

I always focused on six big things, any of which if needing work or replacement might put me upside down on a house: foundation, plumbing, heating/cooling, appliances if included, roof, electric. If all those were in good shape--and I know enough to evaluate them--then I'd move to the next stage of buying it, i.e., making an offer.

If the roof were shot, I'd figure out what the house was worth if it had a good roof, then deduct the cost of roof replacement or repair from my offer. The idea was that I wanted a house that wouldn't be likely to have any significant repairs. I didn't shy away from a house with problems as long as I knew what they were and factored in repair or replacement in setting my price.

If you're not confident you can do this, get it inspected. Some of it is knowing what's a shrinkage crack and what's a settling crack, and if you're betting hundreds of thousands of dollars on your ability to learn this from the internet, that's a sucker bet.

My 2 cents. Good luck!

 

[madscientist451]

Pay for the inspection and go along with the inspector and ask a lot of questions. You'll learn a lot and will be able to (somewhat) evaluate a property next time.
You can still buy the property "AS IS" but at least you'll know if there are any problems.
The inspection is one of the least expensive costs involved in the home buying process.
Edit: Many states require that a seller disclose problems that they know about.
A seller can always say they didn't know their were code violations or something like that. But if the seller received a notice from the city that the septic system is out of compliance and needs to be corrected or that there are code violations that a city inspector could see from the street, then those things are documented and have to be disclosed.

 

[stz]

I bought this place without a survey and plenty of people thought I was acting stupidly. My rational was that the general survey most often sold for 'peace of mind' wasn't going to tell me anything more than a walk around the property with my father would. If anything came up on that walk around which concerned either of us we'd skip the general survey and go straight to pricing the work with an expert in that area. I mean, you need a survey to help you make a decision on something you aren't an expert in, if the survey is a broad and general one (and here they are very basic unless you go for specialist ones) then you don't need the survey to help you make a decision on something and if you are concerned go for the expert opinion or walk away. All our offers were conditional and non-binding up until the date of exchange.

For me it is pretty much foundations, drains, roofing, electrics and heating. We walked away from one house which was described as having suffered 'historic settlement' as even repaired and no longer ongoing it would have been the same headache convincing buyers when I came to sell. Another because when we put a measured amount of dyed water down the drains at the back we lost a significant amount by the time it reached the street. Upon investigation it seemed to be leaking under the driveway and as floor joists along that side of the house had been replaced I assumed ongoing moisture penetration from the leaking drains.

Ah the joy of buying 100+ year old houses.