As BTPM NPR reported in August, home inspections are being waived by prospective homebuyers at some of the highest rates. What are those in the industry seeing? And what legislative action are they pushing for to ensure safety of homes on the real estate market?
New York state law, like many states, has a degree of required information disclosure from sellers and allows homebuyers to get an inspection done on the house they’re interested in from a licensed professional. What it doesn’t do, is protect that homebuyer from having their offer turned down because they’ve asked for one.
“The problem is, if you don't have access to home inspection and you're relying on property condition disclosures, you don't have much protection," said Larry Ames, secretary and board director of the New York State Association of Home Inspectors. "Because the property condition disclosure allows a seller to say unknown, unknown, unknown, and many of them are not making truthful statements.”
Ames said their job has been one long trusted by both buyers and realtors for decades. Licensed by the state, they perform top to bottom inspections of homes to identify their condition. But with the COVID-19 pandemic, came a massive shift in the housing market and its long-established norms.
“What's changed is the resulting sellers market, with a very limited supply of houses, created a situation where buyers may have been encouraged or decided to waive a home inspection contingency, which is part of a purchase offer, in order to make their offer more attractive," said Ames. "In addition to maybe offering 20-30% Over the asking price and putting in very, very high down payments.”
Nearly 25% of buyers waived home inspections in 2024, according to the National Association of Realtors. While putting in offers well above asking price and waiving inspection may get enthusiastic buyers a home, Ames said it can come at a high cost and fights with insurance companies once a buyer moves into a home.
“[Insurance companies] have to be very careful about the homes that they accept, and they will often send out an inspector of their own to look at the house. I've seen cases where the inspector came out and said, 'Yeah, you need a new roof, a front porch, new electric service.' Well, you're talking tens of thousands of dollars, and the family may be strapped with nobody else to ask for help and no other resources," he said. "Having paid 20-30% over asking price, put down a large down payment — what are they going to do? They they have 60 days to get this done, or else the insurance is withdrawn.”
Without home insurance, a mortgage company can start foreclosure proceedings. That’s one of the reasons why Ames and New York’s Association of Home Inspectors is pushing for state legislation that strengthens homebuyers’ rights to an inspection. Massachusetts now has a law, and there is a renewed effort in New York.
State Senator Rachel May introduced a bill for the 2025-2026 legislative session that would prohibit both sellers and buyers from agreeing to sell residential properties with the contingent that an inspection be waived or restricted.
“I think it's a necessary and an obvious step, you know, there are property condition disclosure laws. The legislature has done that to support home buyers, and they've created the home inspection profession to support home buyers," Ames said. "In this they realize that it's important for the buyer to have professional valuation and to know what they're buying.”
May’s bill is currently in committee. The legislature reconvenes in January.
