Should Hawaii have a Consumer Protection law for the Buyer?

What was the problem in Massachusetts?

More and more Buyers have been coerced to waive the Home Inspection in recent years to compete in a hyper-competitive housing market. The residential real estate market was so competitive, many waived the home inspection to make their offers more attractive to Sellers.

Home inspectors warn it is a dangerous gamble that can cause safety and financial risks down the road. The law would essentially remove the home inspection contingency as a bargaining chip.

“It would no longer be part of the negotiations of buying a home,” said President of ASHI New England, James Malgeri. “You can’t sweeten up your offer by waiving it.”

In short, this law will eliminate the waiving of the Home Inspection as an incentive for the Seller to accept the Offer.

Specifically, this new consumer protection makes it illegal for Sellers or real estate agents to condition the acceptance of an offer to purchase a home based on a buyer’s “agreement to waive, limit, restrict or otherwise forego” their right to an inspection. It also makes it illegal to accept an offer based on direct or indirect advanced knowledge that the prospective buyer intends to waive their right to an inspection.

This law aims to give home Buyers a fairer, more transparent buying process and aligns with Massachusetts’ emphasis on consumer rights.

A good analogy is the seat belt law in Hawaii, as it captures the balance between individual freedom and safety, both in terms of personal choice and regulatory protection.

Here’s how the comparison plays out:

Individual Freedom vs. Protection: Like seat belt laws, the Massachusetts home inspection law places a regulatory standard on a traditionally flexible process. Buyers previously had the freedom to waive inspections, especially in competitive markets, to speed up transactions or make their offers more appealing. With this law, there’s an implicit nudge toward safety, protecting Buyers by making inspection rights explicit. This can feel like a restriction for those who prefer a fast, flexible transaction, much like some people felt seat belt laws limited their freedom of choice.
Preventative Measures: Both laws are proactive in nature. Seat belts prevent injuries in the event of an accident, while home inspections help prevent financial “injuries” by uncovering potential issues before the buyer is locked into a costly purchase. In both cases, the regulations aim to mitigate risks by ensuring people have the information or protection necessary to avoid harm.
Shifting the Norms and Cultural Expectations: Just as seat belt laws have made wearing seat belts a widely accepted norm, the home inspection law could shift buyer expectations. Buyers might increasingly view inspections as a standard, necessary step rather than an optional one, and sellers might come to anticipate inspection negotiations as part of the transaction. Over time, this normalization can lead to higher safety standards but may feel restrictive to those who value autonomy in decision-making.
Market Dynamics and Costs: With seat belt laws, there are associated costs (fines for non-compliance) but also savings (reduced medical costs in the event of an accident). Similarly, mandatory inspection rights introduce costs (inspection fees, potential repairs), but these costs are aimed at preventing larger financial burdens that could come from undisclosed property issues. Some might feel the upfront cost is a burden, while others see it as a worthy investment in safety and due diligence.
Responsibility and Liability: Seat belt laws place responsibility on the individual to protect themselves, and non-compliance can lead to penalties. With the home inspection law, the responsibility shifts to the Realtor and Seller to ensure Buyers are aware of their right to an inspection. This regulatory framework provides protections, but also holds parties accountable, which can be both beneficial and challenging.

In both cases, the law’s intention is to balance the freedom of individuals with a focus on consumer protection and safety, aiming to create a culture where precautions are the norm, while recognizing that not everyone may feel the need for them in every situation.

In summary:

For the Law (Buyer Protection): There’s a compelling argument that home Buyers deserve as much protection as possible, given the significant financial and emotional investment a home represents. Like seat belt laws, this legislation aims to make a fundamental aspect of safety—here, financial and structural—more accessible and expected. Many Buyers, especially first-timers, benefit greatly from the knowledge that inspections offer, helping them avoid surprises that could have severe financial impacts. It also levels the playing field, ensuring that all buyers, not just those well-informed or wealthy, understand and have access to inspections.

Against the Law (Flexibility and Market Dynamics): On the other hand, some believe that in a competitive, fast-paced market, Buyers should retain the freedom to waive inspections if they choose, prioritizing flexibility and simplicity in transactions. For experienced Buyers or those willing to take on a fixer-upper, waiving an inspection may be a risk they’re comfortable with, and the law can feel like an added layer of regulation in an otherwise personal decision.

The bottom line:

Ultimately, the balance lies in recognizing that while individual freedom is important, Buyer protection offers significant value, particularly for those less experienced in the complexities of real estate. This law doesn’t eliminate choice entirely but instead standardizes the option, offering a clearer path for Buyer safety without fully restricting those who might choose otherwise.

For any questions on this topic, please call Oscar Libed of  Inspect Hawaii at 808-728-5707 or send an email to  [email protected]