BUYER BEWARE
Skipping home inspection in red-hot real estate market can be expensive decision
Anxious buyers in Windsor’s red-hot real estate market are foregoing home inspections, worried that any conditions they might attach to purchase offers put them at a disadvantage over the competition.
Ron thought the Old Riverside bungalow offered for sale at $80,000 was a bargain, but knowing that other buyers were interested, he had to act fast, and that meant foregoing the usual home inspection. Big mistake. It was only after he paid for it last month that Ron — who asked that he and the specific address not be identified due to pending litigation — found his new home might end up costing him nearly double the purchase price due to costly repairs. Told the house was built on a concrete foundation, he discovered instead that the flooring was actually constructed on boards on dirt, and the wood was soggy, rotting and causing parts of the floor to sag.
“The seller did not want a home inspection, it was a cash offer without conditions,” said Ron, who has bought homes before to convert into rentals and “didn’t see anything bad” here. What had been an estimated $5,000 budget to spruce up the home could now cost him $50,000 due to the need to raise it up to build a proper foundation.
That telltale rotting floor would have been an easy catch during a proper pre-purchase inspection, according to Bob Price, a certified master inspector with Bob Price Home Inspections Ltd.
“This is a new trend, something we’ve never seen before,” Price said of local buyers skipping proper home inspections as a condition of purchase.
Because buyers are crowding the local market to snap up homes as soon as they hit the market, Windsor sellers can be fussy. “People have to come in with a clean, ready-to-go offer,” said Price.
Kim Gazo, president of the Windsor Essex County Association of Realtors, said it’s not uncommon for homes selling in popular areas of south and east Windsor to draw up to 20 offers. Frustrated buyers, “stuck in bidding wars over and over again, will do what they can to get that house,” she said.
And that means shedding all preconditions, including the clause that commonly makes the closure of a sale subject to a home inspection.
“We don’t recommend that ... but it’s the purchaser’s decision,” Gazo said of buyers foregoing pre-purchase inspections. But it’s a risk a growing number of buyers feel forced to accept in order to be successful in Windsor’s hottest sustained housing market in decades.
“There’s a point where they just want to move,” said Gazo, who’s also a saleswoman at Deerbrook Realty Inc. She said agents are urged to get it in writing from their clients in advance when they insist on skipping a home inspection.
Windsor home inspector Stephan Tremblay, owner of Northern Inspections, said he’s losing about 10 clients a week who book an appointment but then cancel after finding out such a condition might see them losing out on a successful bid.
Tremblay said he’s heard of sellers advising prospective buyers to lose the home pre-inspection clause or risk not even have their offers considered.
“The clients we used to see were nervous and excited. Now, by the time we see them, they’re just drained, they just want a roof over their heads,” said Tremblay.
Inspectors such as Tremblay and Price said they’re increasingly seeing clients after the fact. Tremblay said he’s had a couple of clients who bought homes only to subsequently discover they had $15,000 bills for structural damage repairs.
“Once you own it, you’re left holding the bag,” said Tremblay.
That home inspection clause means a prospective buyer can get their deposit back and walk away should potentially pricey problems be discovered, such as mould in the attic or crawl space or outdated electrical wiring that needs replacing.
“Realtors are caught betwixt and between — seeking that inspection, (the client) is likely not going to get that house if there are multiple offers,” said Frank Binder, a broker with Royal LePage Binder Real Estate.
“The bottom line is, the less conditions you have on your offer, the better your odds of getting that house,” he added.
Binder said there’s “a lot of angst” among local real estate agents in the current market. Especially when the homes are older or located in Windsor areas prone to flooding, “there is substantial risk” to clients willing to forego an inspection, he said.
Such an inspection, which includes an in-depth look from crawl space to attic, from plumbing, HVAC and furnace to integrity of walls and roof, usually costs in the range of $300 and, if conducted by a properly licensed inspector, includes a written report and professional indemnity.
“There are too many cowboys in this industry,” said Tremblay. Just this month, Ontario approved legislation tightening up how and by whom such home inspections are conducted.
Binder said some buyers are seeking reassurance by hiring home inspectors to attend open houses and viewings with them for quick verbal reports on what they see, but they remain a risk, with the buyer still not protected if problems are discovered after a purchase.
Binder, in the local real estate business for 41 years, said he’s never seen a housing market so on fire for such a sustained period of time. “The demand is substantial,” he said.
The latest Royal LePage market survey released this week reports the average Windsor home price rose 8.5 per cent over the past year, but Deerbrook’s Gazo said there are pockets in the city where sellers are getting up to 30 per cent or more above their asking price.
For real estate professionals, “it’s exciting and stressful at the same time,” she said.
And while Windsor has boasted a sustained seller’s dream for the past two years, Gazo said it’s important to put the local market in perspective. She said the average Windsor home still sells for less than half the $570,000 national average of 53 cities in the Royal LePage survey.