24 Apr How Savvy Buyers Manage Risks in a Seller’s Market
Without the benefit of a traditional home inspection, buyers in a seller’s market can take several steps to protect themselves from damage and deterioration of real property. In Northern Virginia, the inventory of available homes remains low, translating into multiple offers on the same property. To be competitive, buyers continue to waive contingencies, including the home inspection, which can result in unexpected post-closing expenses to repair and update the property. Other factors, such as the 6-8 month lead-time in new construction, contribute to a seller’s market. Buyers need to be creative and proactive to ensure they aren’t getting a property that doesn’t match their needs and expectations.
Understanding the Risks
A home inspection before purchasing property helps identify critical issues that can have costly implications for a homeowner, not to mention potential safety hazards. In a more balanced market, a buyer can make an offer contingent on the results of a thorough home inspection. This allows for renegotiation of the purchase price, withdrawal of the offer, or other options that protect the buyer. The additional expenses can be direct – such as repairing or replacing obvious problem areas like roofs, decks, water heaters, etc. Expenses can also be indirect. For example, an aging roof might impact the cost and coverage of homeowner’s insurance. In addition to the seller’s market, the current high-interest rates on mortgages mean that the cost to purchase a home is exceptionally high, so a buyer may be unable to afford the “real” cost of the new home once these issues have been identified.
When to Act to Minimize Risk
Without a contingency, home buyers have other options to protect themselves. First, they can arrange for a walk-and-talk consultation in which the home inspector visits the property with the buyer and helps identify apparent issues. Knowing in advance that work will need to be done can help a buyer determine the amount of their offer and plan for the coming expense. This is an essential strategy for a buyer who uses an escalation clause to make their offer more competitive. Post-purchase, an inspection within 30 days of settlement can help a buyer manage homeowner’s insurance challenges. From a safety and home value perspective, buyers should also consider radon testing within the first 30 days of a home purchase.
Buyer Be Aware
Rather than blindly offering on a home purchase that can result in painful, expensive outcomes, a buyer can enter the sellers’ market with a plan allowing big-picture planning. Partnering with a quality home inspector who can provide services outside a traditional, contingency-based home inspection is critical to this plan. Biller and Associates offers a range of services that can fill in the potential knowledge gaps created in a sellers’ market, which can reduce costs and risks. Contact us today to learn more about how we can help.