Homebuyers are regaining some bargaining strength after a few years of making sacrifices in a hypercompetitive market. Over the past six months there has been a significant rise in home inspections, according to new data.
Just 14% of buyers have waived a home inspection so far this year, the lowest share in five years, according to Zillow’s 2022 Consumer Housing Trends Report. That implies that some power is shifting away from sellers, says Nicole Bachaud, an economist at Zillow.
The share of potential homebuyers who completed at least one inspection rose by 1% each year from 2019 through 2021. But so far this year, inspections have boomed—6% more potential buyers had their new homes examined. This suggests that buyers are regaining negotiation power on contingencies that they felt pressured to waive to remain competitive when the market was hotter.
That’s a big shift from the first two years of the COVID-19 pandemic, when sellers often had the upper hand, and many eager buyers agreed to waive their right to a home inspection before closing. But many factors have changed in the past few months.
“Rates are rising, and costs are higher, so buyers are exiting the market, and sales are slowing down,” says Bachaud.
With changing expectations in the housing market, home purchases aren’t moving at the same speed as they did in 2020 and 2021. Sellers are no longer expecting crazy bidding wars and waived contingencies, says Bachaud. And inventory is increasing, giving the remaining buyers more housing options with a lot less competition.
The takeaway: Bypassing an inspection is no longer always necessary to beat out the competition, according to Zillow.
“Much like competing with cash, buyers who insist on an inspection can still generally win if their offer is adequately appealing to a seller’s desire for profit and undelayed timeline,” reads Zillow’s report.
