January 31, 2017

Should You Skip Your Home Inspection?

Buying a home, especially your first, is generally considered to be the most important purchase a person will ever make. The sheer cost involved means it’s a decision you normally would want ample time to think about – but that’s a luxury many buyers in Toronto’s ultra-competitive housing market don’t have. In fact, the Toronto real estate market is so hot (as are surrounding Golden Horseshoe markets like Hamilton real estate) it means some are willing to cut some corners to seal a deal. Foregoing the home inspection process is one such short cut, although it’s not a tactic that Zoocasa sales agent Brittany Kostov would ever endorse.

“You can’t control if you have a client that wants to skip a home inspection,” she says. “In some cases there are buyers that won’t walk away from a property ­- they don’t care if it has had a flood or mould in the attic, they will put whatever they can into that home because of its location.”

Related Read: Should You Ever Drop Your Offer-to-Purchase Conditions?

No Time to Lose on Conditions

Historically, a home inspection would be the responsibility of the buyer and represented a crucial step in the process that goes into purchasing a home. Usually an inspection would take place after the seller accepts an offer, but before financing is completed and the deal is signed. But in Toronto in 2017, things tend to move much faster, as Kostov explains.

“For a buyer to win in this market they absolutely need to take care of financing and home inspection before offer night,” she says. “That means doing all their due diligence before it comes down to writing the offer.”

Working with a Home Inspector

In Canada, each province has its own professional standards body for home inspectors. These associations then fall under the umbrella of The Canadian Association of Home and Property Inspectors (CAPHI) which has set standards of practice and codes of ethics for the industry.

Related Read: New Home Inspector Regulations Coming to Ontario

As the industry is not regulated by the national government, there are home inspectors operating across the country without the knowledge and expertise required to carry out proper assessments. For that reason, CMHC recommends using an inspector that carries the National Home Inspector (NHI) designation, which is awarded by the independent body, the National Home Inspector Certification Council (NHICC).
A qualified home inspector, in assessing your property, will search for any structural defects, as well as any conditions that may present a health or safety issue down the line.

“The big things they look at is the age of the roof, the furnace, the air conditioner, has there been a leak in the property, is there mould? Home inspectors are not specialists in mould or asbestos, they are more like general contractors, but they are able to point out if you have some concerns with a house,” says Kostov.

Wiring a Common Downfall for Buyers

While finding asbestos in the attic would be somewhat rare nowadays, identifying problems with wiring is fairly common, says Kostov. Homes must deal with a lot more electronics than in the past, so this means older properties often need to be brought up to code.

“The big one that comes up is knob-and-tube wiring,” she says. “That must be replaced before you set up insurance with your mortgage. Your home insurance company will ask if there is knob-and-tube and in what percentage of the building it is present. If it is over a certain percentage you will have to get it replaced.”

Sellers Picking Up the Tab

A home inspection usually costs between $400 and $700, which represents a small fraction of the cost of the property. For that reason, listing agents and sellers are increasingly the ones carrying out the inspection in order to expedite a sale. Buyers then have a chance to have a walkthrough, usually for half the original inspection cost, where the inspector will explain the details of their report. It’s a reversal of how things used to be done, says Kostoz, but typical of how Toronto’s scorching hot market has evolved.

“Historically it was the buyers having a home inspection before the price was negotiated but now that has switched,” she says. “Sellers are taking care of it so they can get as many offers as possible without having to wait on 12 different home inspectors coming in to look at the property.”