BUYER BE AWARE!
New York State RIGHT TO HOME INSPECTION
Buying a home without inspection is like getting married on the first date...what could go wrong?
WHY THE RIGHT TO A HOME INSPECTION IS SO IMPORTANT
Market Conditions Undermine Home Inspection Protection
Market Conditions Undermine Home Inspection Protection
Market Conditions Undermine Home Inspection Protection
Highly competitive market
Recent years have seen extraordinary housing market conditions:
-Extremely low housing inventory (sometimes as little as one month of supply vs. the six months considered healthy).
-High interest rates discouraging owners from selling.
-COVID Urban-to-rural migration drove up demand and gobbled up available homes.
-Strong seller’s market, with flash sales and “as-is” offers are common.
This has led to troubling practices:
-Waiver of Home Inspection to make offers more competitive.
-Blind bidding, where buyers have no reliable visibility into competing offers.
-Walk-n-Talk “inspection”, very limited in scope – not a regulated Home Inspection - no written report, and little recourse for missed defects.
-Severe time constraints, leaving buyers unable to secure the inspector of their choice.
-“Information-only” inspections, which allow no recourse for buyers even if serious defects are discovered. Large earnest deposits are at risk.
-Inspection before purchase agreement, particularly downstate, where buyers may pay for multiple inspections only to be repeatedly outbid.
Home Inspection Waiver is the “New Normal”
Market Conditions Undermine Home Inspection Protection
Market Conditions Undermine Home Inspection Protection
Corporate buyers enter market
-Prior to COVID, home inspection before closing was a standard and expected part of the home buying process.
-In recent years, market conditions have made home inspection waiver “the New Normal”.
-Home inspection waiver persists, even as the seller’s market is cooling.
-New on the residential real estate scene are “corporate” institutional investors snapping up homes to rent or flip.
-Savvy “corporate” buyers are experienced and have their own resources to evaluate a home purchase.
-They also are wealthy and can tolerate surprise home defects that would be devastating to average, and especially low-income buyers.
-Despite this, buyers are compelled to waive home inspection at great risk to make their offers competitive with the “corporate” buyers that can waive with relative immunity.
-Average home buyers should not have to risk everything to have a chance for their own home. It is not right, and it is contrary to public welfare.
-“Corporate” interest in residential real estate is perpetuating the “New Normal” of home inspection waiver.
-Home buyers are being told that home inspection waiver is just how things are done.
Pre-Inspected/Move-in Ready
Market Conditions Undermine Home Inspection Protection
The risks of no pre-closing inspection
Urged to accept seller's inspection
-A recent, growing, and dangerous trend.
-Buyers are encouraged to waive home inspection and rely on an inspection made for someone else.
-The pre-inspections offered are hired by the Seller or Listing Agent – both with very strong incentive for quick sale at a high price.
-Home inspectors involved in pre-inspections often rely on real estate agents for referrals to make a living. They can be unduly influenced to “soft-pedal” their reports.
-Relying on someone else’s inspection performed by an inspector that you did not vet and choose is a major risk.
-The NYS Association of Home Inspectors (NYSAHI.org) takes the position that agents and inspectors involved in promotion of pre-inspected move-in ready homes to encourage home inspection waiver is an unethical practice.
The risks of no pre-closing inspection
Why Existing Laws Don’t Adequately Protect Buyers
The risks of no pre-closing inspection
Left holding the bag
-Homes are complex systems and very few home buyers have the experience and training to reliably evaluate them. Even experienced trades-persons lack the very broad scope preparation to be competent in home inspection.
-The generalist profession of Home inspection was created by the NYS Legislature to protect homebuyers in what often is a momentous and life-changing purchase.
-NY is a “buyer beware” state meaning a buyer is responsible for their own evaluation of a purchase.
-Even though sellers and real estate agents are legally required to disclose material issues with a home, that conflicts with a quick sale and high price, resulting in ethical challenges. Few new home buyers have the energy or money to mount a legal dispute to go after unethical sellers or agents.
-Buyers must get homeowner insurance before closing. Insurance companies frequently inspect after the buyer moves in. It is not uncommon for them to find major issues that are a surprise to the new owner, who has spent pretty much everything they can muster to buy the home and might well not have resources to do the required fixes in the required 30-60 days allowed. They can lose their insurance and since that is required for their mortgage, get a demand to pay that in full.
-Buying a home without pre-closing inspection is a very risky bet with odds against you, and one that most cannot afford to lose. Unknowingly buying a “sick home” or “money pit” can destroy financial security, cause major emotional and physical stress, illness or worse. It can devastate family harmony. It may even leave some broke with ruined credit and homeless.
-The American Dream of owning a home should not become a nightmare. Every home buyer must be protected by law against having to waive inspection to buy a home.
Why Existing Laws Don’t Adequately Protect Buyers
Why Existing Laws Don’t Adequately Protect Buyers
Why Existing Laws Don’t Adequately Protect Buyers
Home buyers can be hustled
While NYS has consumer protections on paper, they are largely ineffective in practice:
-Property Condition Disclosure Law – Sellers can check “unknown” or may misrepresent form entries. Proving fraud is extremely difficult and lawsuits are very expensive and rare.
-Real Estate Agent Disclosure Obligations – Real estate agents are legally required to disclose known material defects and conditions affecting a home's value or safety. But, commissions create powerful incentives not to disclose problems.
-Enforcement is reactive and rare. Buyers are mentally, physically and financially exhausted by the home buying process and unlikely to report offenses or sue.
-Bank/Loan Inspections – The purpose of appraisals is to assess value. Appraisals assess value, not safety.
-HUD/FHA/VA loan program inspections are cursory and not substitutes for Home Inspection.
-Buyer’s may be improperly encouraged to accept these other inspections in lieu of a full regulated Home Inspection.
What is the Right to Home Inspection (RTHI)?
Why Existing Laws Don’t Adequately Protect Buyers
Why Existing Laws Don’t Adequately Protect Buyers
A straight-forward solution
The RTHI bills (S5772/A4883) would:
Guarantee every home buyer the right to a NYS regulated Home Inspection by the inspector of their choice, BUT NOT MANDATE HOME INSPECTION.
-Ensure reasonable time for inspection and review.
-Allow buyers to withdraw without penalty and receive a prompt refund of earnest deposits if the inspection reveals unacceptable conditions.
-Prohibit offers or purchase agreements that waive or restrict this right.
-Establish stiff penalties for violations, particularly for professionals or businesses.
-Require a state-issued advisory form informing both buyer and seller of these rights.
Reasonable exclusions would apply for court-ordered transfers, family transfers, and public auctions.
RTHI Benefits to Home Buyers
RTHI Benefits to Home Buyers
RTHI Benefits to Home Buyers
Helps ensure a Happy Home
-Assures access to the benefits of pre-closing home inspection.
-Relatively low cost protection for a very large purchase.
-Thorough evaluation by a specialist in General Inspection.
-Written objective report that can be used for negotiation.
-A check on seller and agent disclosures.
-Don’t have to fully rely on seller or agent disclosures.
-Material issues identified.
-Awareness of health and safety threats.
-Report can be used to prepare a financial plan for purchase and maintenance.
-Inspector can offer a wealth of information about taking care of a home.
-Much reduced risk.
-A home purchased with confidence.
Real Estate Agency Benefits
RTHI Benefits to Home Buyers
RTHI Benefits to Home Buyers
Protection for agents and brokers
For real estate professionals, RTHI provides:
-Substantially lower liability, no interference with buyer due diligence.
-Stronger fiduciary reputation and improved client trust.
-Reduced conflict with buyers who later discover defects, fewer “sleeper” claims.
-Return to the “old normal,” where inspections were a standard, expected step in home sale transactions.
-Agents can sleep at night knowing that their client's families will move into homes much better assured to be safe and affordable.
Broader Benefits of RTHI
RTHI Benefits to Home Buyers
Broader Benefits of RTHI
Far reaching societal impacts
-Protects consumers in what is often the largest purchase of their lives.
-Reduces liability for sellers and agents by ensuring transparency.
-Strengthens mortgage and insurance industry portfolios by identification of home issues, making them more likely to be addressed before closing.
-Supports public welfare and tax base by reducing foreclosures, homelessness and abandoned “zombie homes.”
-Helps level the playing field for first-time and lower-income buyers by taking home inspection waiver off the table in purchase offers.
An affordable home is not so much the one you can afford to buy...it's the one you can afford to keep!
Too many homebuyers are put in the position where they cannot get a Home Inspection prior to closing on the purchase of their home. Almost all buyers need the professional support of a licensed Home Inspector to understand their intended purchase. Buying a home without inspection first is a huge risk that no one should be put in the position to have to take. The result can be devastating if you are not lucky. Health, safety and financial wellbeing are at stake.
Legislation has been introduced in both houses of the NYS Legislature to protect homebuying consumers.
Learn more about the Right To Home Inspection Act.
PLEASE TELL YOUR REPRESENTATIVES THAT YOU SUPPORT RTHI
WE NEED YOUR HELP TO
PROTECT ALL NEW YORKERS
RTHI law is for general public benefit and fundamental consumer protection. Your contributions will enable us to fund professional lobbying that is expensive. We really need your help to make this happen. Please consider a one time payment or a recurring monthly donation. Every dollar helps!
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NEW YORK STATE ASSOCIATION OF HOME INSPECTORS
