In today’s frenzied real estate market, Toronto home buyers are doing just about anything to win the bid, including waiving the right to a home inspection. The home inspection clause is a standard condition in an offer, meant to inform and protect the buyer. Instead, buyers are using it as leverage. And the risk of doing so can be quite high.
“It’s not that people don’t want to have a home inspection before making the purchase, it’s that, in order for them to be competitive, they have to waive that so they have a cleaner offer to present to the sellers,” says Thomas Rando, owner and president of Clearview Home & Property Inspections.
There were reports of home inspections getting skipped earlier in the pandemic, but with the market as tight as it is now and supply lower than Toronto has seen in years, it appears the problem has only worsened. City inspectors say it’s gotten to the point where so few inspections are occurring that they’re finding their workloads have significantly decreased.
Over the past eight months or so, Rando has noticed a decline in requests for pre-purchase home inspections. That said, his company is often contacted by people who have closed on a property without getting it inspected and want to know where to allocate money for repairs after the fact.
Skipped inspections leading to “horror stories”
“Unfortunately, when we’re doing a post-purchase inspection, we are finding, as you can imagine, some nasty surprises,” says Rando. “Big things could be moisture and mold in the basement. We’ve found major structural problems with the foundation. We’ve found significant repairs that would be needed to the building envelope…. There are a lot of horror stories, unfortunately.”
Of course, different homes have different degrees of risk. If you’re purchasing a condo, you can probably do without the inspection. But if you’re purchasing a house, especially one that is older or has never been renovated, skipping the inspection can result in expensive complications down the line, and can end up affecting your home insurance premiums or your eligibility for coverage altogether.
Michael Schmidt, area director and lead inspector for HouseMaster Home Inspections, has seen many cautionary tales in post-closing inspections, including a home in the east end of Toronto that was literally and visibly sinking into the ground. Schmidt’s post-closing inspection also revealed that the home was prone to water leaks and had asbestos-containing materials. “That is something where, had that client come to us and had that home inspection prior to the purchase process, prior to waiving those conditions, they might have made a different decision,” says Schmidt.
Partial inspections an option for buyers with few alternatives
It’s clear that buyers are feeling backed into a corner given the tense nature of Toronto’s real estate market. But there are alternatives to waiving the inspection condition, explains Schmidt, and one way is by doing the inspection pre-offer. This is something he is seeing real estate agents facilitating for their clients.
“They’ll come in and they’ll do an inspection before they place an offer so they don’t have to include the clause. So we’re doing a lot of those,” he says.
HouseMaster also offers partial inspections. This scaled-down service is geared at buyers who have a short window of time to get the home checked out. Typically, this involves inspecting the building envelope and mechanical systems, and addressing any specific concerns the client might have.
Although Rando agrees that there is some value in the partial inspection model – it does save the client time and money – Clearview doesn’t offer such a service.
“It’s not a complete picture and the opportunity to still miss something that’s big is a real risk,” says Rando. “We don’t do it because of the unknowns and maybe the false confidence that it might give a potential buyer.”
Try getting ahead of the problem with pre-offer inspections
With the spring buying season around the corner, and housing demand as robust as ever, both Rando and Schmidt caution home buyers against making any hasty decisions.
“In a perfect world, it would be great if the inclusion of an inspection was mandatory,” says Rando. “Mandating would be great, but not going to happen, in my opinion, any time soon.”
In the meantime, home buyers can take advantage of the fact that home inspection companies may not be as busy right now and can turn around inspections in 24 hours or less.
“People can actually call in the night before and still get an inspection the next morning,” says Rando. “Particularly now, because there are so many people who had to waive the conditions. Many inspectors and our colleagues have a lot more flexibility.”
Another hack: bring a home inspector to the initial viewing and get an inspection done pre-offer. If you like the home, you will have at least a partial inspection out the way, and you can feel more confident about making an offer.
And if the sellers tell you there’s not enough time for an inspection? “Ask if you can do it early in the morning,” says Schmidt. “I just did a home inspection at 7:00 am the other day on a Sunday.”
Whatever you choose to do, if you’re working with an inspector, make sure that you’re getting a report in writing. If an inspector is resistant to providing a written report, there is a chance that they are not insured.
“The way it works in the home inspection business, no report, no insurance,” says Schmidt. “It is a condition of our insurance. If you do not deliver a written report to your client, a document that basically records what was done and what was handed over to the client, there is no basis for a defence in a lawsuit if one was to happen.”
