PITTSFIELD — The era of potential homebuyers waiving home inspections as a bargaining chip to outbid others is over.
In an effort to level the playing field and protect consumers in an already tough housing market, a new law that affects transactions on and after Oct. 15 prohibits sellers of a residential property from trying to entice homebuyers to waive an inspection or accepting an offer where the buyer has agreed to waive the inspection, according to Massachusetts Association of Realtors.
Now, both the buyers and sellers have to sign a disclosure that states homes cannot be sold based on the contingency the inspection will be waived.
A buyer is still not required to have a home inspection under this new law, which was passed as part of the 2024 Housing Bond Bill, but is guaranteed the right to have one. A licensed home inspection gives the buyer important information that can inform their decisions when closing on a home, housing experts say.
The practice of waiving an inspection to get to the top of the list in a bidding war took off during the COVID housing boom, which saw a drastic increase in home sales due to low mortgage rates and people looking to move with the new found freedom of remote work.
“Some people were trying to make offers super competitive,” said Sandy Carroll, the CEO of Berkshire Realtors. “Some might be waiving an inspection, and some might be waiving their right to exit a contract due to inspection issues.”
Dan Francese — a local, licensed home inspector of more than 20 years — said the trend was so prevalent that some realtors mentioned waiving inspections as a strategy.
Since inspections can unveil thousands of dollars of necessary home improvements, they can often result in the buyer either lowering their offer in accordance with the repairs necessary or withdrawing their offer entirely.
This made the practice of waiving an inspection a bargaining chip buyers used in order to make their offer stand out, since, without an inspection, a home’s deficiencies couldn’t be uncovered.
The new law “tries to enhance consumer protection,” Carroll said.
The law doesn’t require buyers to have an inspection, she explained, “but it gives them a right so that it’s not something that can be waived out as part of a purchase agreement in any way.”
Massachusetts law prohibiting the waiving of inspections came into effect on Oct. 15.
Massachusetts is a buyer beware state, meaning there are strict consumer protections, including a home inspection contingency on most sales.
“That allows [buyers] to make informed decisions to get out of the deal, possibly renegotiate the deal, in any number of fashions with the advice of their agent,” Francese said.
Francese said he has seen purchases fall through “many, many, many times” after a home inspection unveils major problems.
While the new law guarantees prospective homebuyers an inspection, and thus the whole story of a home’s condition, there are some reasons buyers could be upset.
One counter argument to the law is taking away a bargaining chip from buyers, Carroll said.
While most home sales will fall under this law, there are a few exceptions, the Massachusetts Association of Realtors explained. You can find those exceptions below:
- Residential properties sold at an auction conducted by licensed auctioneer.
- Homes transferred to a relative, whether through blood, marriage, adoption; or to a former spouse pursuant to a judgment or order under M.G.L. c. 208 for estate planning purposes
- Home sales involving foreclosure of a mortgage, deed-in-lieu of foreclosure or reconveyance to release a debt or lien.
- The sale of newly constructed residential property, so long as the purchase contract was signed before the property is ready to be occupied, and the seller offers an express written warranty for at least one year.
