Forgo a home inspection? How buyers can protect themselves in competitive markets




Amanda Stephenson, The Canadian Press



Posted Thursday, March 24, 2022 1:13 pm EDT





Last Updated Thursday, March 24, 2022 1:13 pm EDT

Looking for a house in Oshawa, Ontario. This winter, prospective homebuyers Nadeem Sumar and his wife Gurleen Saggu knew it was their job to keep an eye out for anything that looked questionable, from a crack in the foundation to a mysterious water stain.

“We had some strict guidelines,” Sumar said. “If there were any red flags, we just wouldn’t pick that property.”

In 2022, many Canadians with no home building or repair experience suddenly find themselves in the position of evaluating roof tiles, gutters and caulking.

That’s because, like Sumar and Saggu, they are vying for a home in the country’s hot real estate market, a market where the home inspection clause, once considered a standard and essential part of any real estate contract, is no longer an option. in many places.

“We put in about 12 or 13 offers,” Sumar said, adding that the couple ultimately failed to find a home and decided to wait a few months to see if things settle down before trying again.

“We knew that putting in an inspection clause was not even a possibility.”

According to the most recent statistics from the Canadian Real Estate Association, home sales in this country increased 4.6 percent in February. Sales levels for the month were about 35 percent above pre-COVID norms as buyers scrambled to lock in historically low interest rates set to rise this year.

Prices also continued to rise, with the national median Canadian home price in February nearly 30 percent higher year over year. In some regions, the growth was even more extreme: Calgary’s real estate market soared, with the reference price rising 34.6% in the last three months alone.

In markets like this, buyers often find themselves competing against multiple offers. That not only means houses are selling above asking price, but it also means many buyers are making unconditional offers.

“In this market, especially the Toronto market, but it has also moved to Ottawa, Barrie, Burlington and other places, it would be very rare to see a condition on a home inspection,” said John Lusink, president of Right At Home. , based in Toronto. Real estate.

“Most real estate agents would be saying, ‘If you put that condition in, you’re never going to get a house in today’s market.'”

So is it still possible for buyers to protect themselves against hidden defects and expensive repairs, and still get a home in an in-demand neighborhood? Experts say yes, as long as they’re willing to think outside the box.

Lusink said some buyers who know they won’t get a home if they condition their offer on a home inspection choose to hire a licensed home inspector or someone else with specialized knowledge to accompany them to showings and house calls. open.

“Doing a pre-inspection, yes, it has to be on your own, it’s still something I highly recommend,” he said. “Find an expert, maybe a home inspector or someone with good construction experience, to walk you through.”

If that can’t be arranged, another option for homebuyers is to request access to the property for an inspection between the time the deal is signed and the date of possession. While getting out of a deal after the closing date isn’t necessarily easy, it is possible if an inspection reveals a major problem.

“Buyers should discuss with their representatives to see if they can include something like this in their agreement,” said Joe Richer, registrar for the Real Estate Council of Ontario. “Yes, ideally the home inspection would be done beforehand, as a condition of the purchase, but there’s nothing to prevent it from happening immediately after it’s signed as well.”

In the worst case, buyers always have the option of hiring a home inspector after taking possession. At a minimum, doing so gives new owners a better understanding of the property they purchased and can help them prioritize and budget for future repairs and maintenance, Richer said.

Richer said it’s important to remember that even in the absence of a home inspection, sellers have a legal obligation to disclose any “latent defects” that are significant enough to render the home uninhabitable or cost too much to repair. . Both sellers and their real estate agents can face lawsuits if they knowingly fail to disclose a significant problem with a property.

Ultimately, it’s up to individual buyers to decide what level of risk they’re willing to accept as part of their home search, Richer said. Some, like Sumar and Saggu, may decide to postpone their homebuying experience altogether.

“For those buyers who feel pressured and may feel like they have to waive that home inspection status, they need to be comfortable with that,” he said. “At the end of the day, they just need to be comfortable with risk. they’re assuming.”

This report from The Canadian Press was first published on March 24, 2022.

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