MA Bill S.2474 An Act protecting consumer rights in purchasing safe and habitable homes - Frequently Asked Questions

MA Bill S.2474 An Act protecting consumer rights in purchasing safe and habitable homes - Frequently Asked Questions

The homebuyer's dilemma - Waiving the Home Inspection

Background: Real Estate market conditions in Massachusetts over the past 4 years and longer, through fierce competition for homes, have created a condition where Homebuyers have little or no ability to evaluate the condition of a home they are buying. In this market, home sellers have no disclosure and no requirement to allow buyers to get a chance to inspect their home. Many buyers are having to decide during a 15-minute open house or viewing if they want to make the most significant investment decision in their life and have their family live in this home - and then must waive their home inspection in order to have their offer even be considered. Currently, home buyers do not have a right to a home inspection, they only can ask for one, and sellers are opting to prefer buyers without inspection contingencies. Many buyers over the past 4 years are now finding that homes they bought without an inspection have safety hazards or various problems - often ranging from approximately $25,000 to $100,000.00 to remedy.

Frequently Asked Questions:

Who is sponsoring the bill?  The Bill, S.2474, is sponsored by Senator Michael Moore and Representative Brian Ashe.

Who is cosponsoring the bill?  There are 38 co-sponsors to this bill listed, found here.

Where is it in the legislature?  The bill was reported favorably by the Committee on Professional Licensure and Consumer Protection, and it is now in the Ways and Means Committee

Does it make home inspections mandatory?  No. This is a common misconception. The bill ensures a buyer's right to a home inspection in any accepted offer. Once a seller accepts a buyer’s offer to purchase, the buyer can then exercise their right to a home inspection or waive the home inspection. 

How is this affected by the NAR settlement?  Great question. Everyone’s talking about the NAR settlement and how it will affect home buying and selling. Buyer representation may change due to this settlement, and right now, we are not sure exactly how it will change. However we do know that any changes in buyer representation may result in less buyer advocacy, and that underscores the need for better buyer protections. This bill will help buyers because they will not have to forfeit the ability to get a home inspection.

When will it be enacted?  When the bill passes into law, it will be effective immediately. It is unclear at this time what notice the realtors will be given and/or how they will be notified. 

Why is this bill being introduced?  It is being introduced because market conditions have forced buyers to forego a crucial step in the homebuying process that helps them understand the condition of the home. The effects of this have been the majority of buyers finding out after the fact that homes they purchased without an inspection have the need for serious repairs and have safety concerns. This bill protects them from financial hardship if the home they are considering buying needs significant work.

Who benefits from this bill?  Everyone, but especially first-time homebuyers, young homebuyers, and anyone unfamiliar with homes and home repairs. 

Who stands to lose something because of this bill?  No one. Even though it may seem on its face that sellers will lose something here, that is untrue. Sellers will benefit from this bill because buyers will be more confident in the buying process, leading them to put more money on the table to purchase and “win” the home. Additionally, without the waiver of the home inspection, buyers will have to use other means to get their bid accepted, such as offering a higher purchase price. This benefits the seller.

How can I help?  Please help! You can contact your senator and representative and urge them to support this bill. Additionally, you can call anyone you know who might be interested in this bill and ask them to support it and call their senators and representatives. You can support this bill financially here. This bill is financed by a non-profit organization working solely to advance this bill, primarily funded by ASHI (American Society of Home Inspectors), New England Chapter, as well as individual home inspectors and home inspection companies across the state. But we need your support, so please feel free to donate.

Once this becomes law, can I waive my inspection to make my offer more attractive to a seller?  No. This option will be off the table. The bill is designed specifically to prevent this practice. 

Isn't there just going to be unofficial waiving of the inspection (“nudge nudge- wink wink”)?  There may be some degree of unfair practices. The unscrupulous will be unscrupulous, and it may not be possible to change them - however, the bill may deter them. The bill includes a provision for a penalty for violators of this law: 4% of the transaction or $10,000.00, whichever is greater.

Why not just stick with what we have, and buyers can have "preoffer" inspections?  Currently, the market conditions have created a pattern of unfair practices that are detrimental to buyers. Pre-offer inspections have taken the turn of “walk-through” inspections that take place in minutes and have no report. This is in direct violation of the regulations for home inspectors because they do not follow the standards of practice. Sellers are limiting access and in many cases refusing to allow any inspections of any type, even if they are pre-offer. 

Are there any better solutions?  Not that we can think of. This bill has been well thought-out, and considered, and many people and stakeholders have weighed in with their opinion. Mandating inspections would be unfair for various reasons, so allowing buyers to waive the inspection if they choose, but after the offer is accepted is the best compromise.

Can I back out of the deal based on the inspection?  Yes.

Can I waive the inspection?  Yes, this is an option you can exercise after the offer has been accepted. 

You guys just want to protect your industry and want more work.  We believe that homebuyers benefit from understanding the condition of the home they are buying, which for most people is the single most significant financial investment of their life and the place where they and their most cherished people will be living. So we believe that every home should be inspected for condition and safety. Will the number of inspections needed in our state increase due to this bill passing? Yes. Do we stand to gain financially? I would say to some degree, this would result in more work - but that is not our motivation. If driven only by financial gain, we would probably not devote our professional careers to crawling around in basements and attics.

I am a builder/developer - what if I don’t want to pay for an inspection?  You are free to opt out of getting an inspection after your offer is accepted- this bill does not require you to get an inspection.

I like waiving my inspection because it gives me an edge over other offers. So I am not for this bill because I will no longer have that edge.  Interesting perspective *hot take!*. We know that this practice does “help” win a bid for a home. However, we are seeing not only many bids on homes, but many bids that all have no inspections. This means that waiving your inspection puts you in an increasingly enlarging pool of others who are doing the same, so you no longer have an edge by waiving an inspection - or maybe just a much less sharp edge. Moreover, many sellers are preventing/prohibiting pre-offer inspections, and are also compressing the offer window timeframe, so availability to pre-inspect the home is scarce - meaning it's even hard to get that pre-offer inspection even if you want that to be your strategy.

Most importantly, the ability to waive the inspection is reserved for people who have the means to fix anything that might be wrong with the home. And for first time buyers and other homebuyers, they may not be comfortable with waiving a home inspection contingency. Therefore the market is skewed in to favor of the people with means and risk-takers. 

I am selling my home, and I am pleased that there are offers without contingencies, so I can sell my home quickly. I want that to continue.  Well, we get that - and at the same time, we know that there is no shortage of buyers in one of the hottest real estate markets in the country. So it is unrealistic that allowing buyers to have home inspections would “slow” your sale, or the real estate market in general.

There is a 10-day inspection period in the bill - I think that’s too long because if the buyer backs out, I will have had the home off the market too long.  It is true that there is a due diligence period built into this bill. It was crafted from the long-standing previous norm that the real estate community has used before this accelerated period in which home inspections have been waived. See the previous comment/question regarding this real estate market.

How does this benefit Real Estate Agents?  Real estate agents, both on the buy side and sell side, stand to benefit from this bill. 

Buyer’s agents benefit because their clients will be more confident going into the transaction if they can perform their due diligence. They may even be willing to offer a higher purchase price for the home if they know they can find out whether or not the home has any significant defects, thereby reducing their risk. Additionally, buyer’s agents reduce their professional liability if the home is inspected. Home Inspectors assume a large degree of liability in the normal course of their business, and there is also a lower risk of a law suit if a professional home inspector has inspected the home

Seller’s agents benefit because buyers will be more inclined to offer more money for the home if they can reduce their risk. This means they make more money. This process also reduces the listing agent’s liability because if the buyer is getting a home inspection, then they will be less likely to file a lawsuit - because a professional home inspection is likely to uncover significant defects. Seller’s agents also benefit from this bill because their clients typically buy immediately following or in conjunction with the sale of their home - they will immediately be the agent for that new buyer.

How does this create more equity in the real estate market?  First-time homebuyers, special loan program homebuyers, and other parties have been effectively shut out of this market because they require certain conditions or would prefer having a home inspection to feel more comfortable making one of the biggest decisions of their life. 

Additionally, the wealthy buyers in this market have been able to absorb defects in the home simply because they have the money to - meaning that foregoing a home inspection is not nearly as risky for them, if at all. In addition, many homes are more well-maintained in the more expensive price point, whereas in the lower price range we tend to see very old, aging housing stock and poorly maintained homes. So this system has shut out the people that need this  service the most, but at the same time allowed preferential behaviors for the wealthy. 

Sellers have also benefitted disproportionately than buyers. In a market where buying homes should be creating wealth and net worth for individuals and families, this market is causing them financial hardship when they have to absorb repair costs and other costs from getting intot he market, whereas sellers are enjoying extraordinary gains with no disclosure, and in many cases are pawning off problems they should be responsible for onto the unwitting buyers.

Won’t this all go away when the market shifts to a buyer’s market?  Yes, it will- so this bill will do no harm and has no deleterious effect on the market during those times. However, when was the last time the greater Boston and Massachusetts real estate market favored buyers? Answer: The 2008-2009 housing crisis, and that was short-lived. Not in the past 25 years (at least) has there been a true “buyer’s market,” and the outlook for the future is not any better - we expect a seller's market to continue into the foreseeable future as housing stick remains low, demand remains high, and the Fed has anticipated three rate lowerings over the next year. Things are only getting more intense and more feverish for buyers. 

Home Inspectors will raise their prices because they know buyers need their services.  We think that’s a stretch. Not really - but for what it's worth, home inspection fees have been lower than they should be - even in a market like Boston, which has some of the higher fees in the industry. The real crunch will be availability. There will be an increase in demand, which will cause a bottleneck in the home inspection supply. This means it is important to maintain the 10-day due diligence period provided in the bill. Whenever possible, buyers should attempt to negotiate a longer due diligence period (this is allowed/provided for in the bill) so that there will be enough time to find a preferred home inspector and get the inspection done, as well as any additional investigation or quoting from contractors.

We want to know what you're thinking about all this- send us an email to - or test us at 857-496-6042 - and let us hear your opinion. Better yet, contact your Senators and Representatives, or the media!

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