Home Inspection Condition - Yes or No? Should buyers include it in their offer?
Friday Jun 04th, 2021Share
[00:00:00] Mike: [00:00:00] welcome to our next episode of the RA panels, a weekly discussion on hot topics happening in the real estate world. I'm Mike Crisp. Metrotown Royal LePage in Holton Hills. And I'm going to host today's conversation today. We've got a great topic and with the current climate of most. Home listing is continuing to go into multiple offers.
[00:00:24] What the buyers do about those conditions. And most notably we're going to focus today's conversation on those home inspections. The panel we've got today, we've got Davor Elise. Melody of course is regulars. And they're going to tackle the questions pertaining to this issue. And they're going to give you their perspective and expertise on this matter.
[00:00:49] But before I flip it over to them, let me set this up for you. More and more buyers are being pressured to make offers on homes without full home inspections. I think that we've [00:01:00] all probably heard that see the panels nodding it's like folks playing Russian roulette with your finances and many could find some unexpected surprises and could on thousands and thousands of dollars potentially in repairs.
[00:01:17] You know what they say, no conditions mean no protection. So, you know, I, I've got actually a really staggering number to share with you. So the number from the home inspectors over the course of the last six months, and this is data that's been shared, you know, with the real estate community, is that approximately 25% of homes are getting a home inspection.
[00:01:41] Now why that staggering is because in a normal balanced market or even in a buyer's market, that number is closer to 90%. So what a difference, and this is what, you know, we're all dealing with. So with that, You've got it set up the panel. So I'm going to turn it over to you now [00:02:00] and see how you can help, you know, these buyers out there make decisions with, which is probably going to be the biggest investment of their lives, which is their homes.
[00:02:10] So I'm going to start with you, melody. You're ready. If you know, you're entering into a multiple offers, how do you counsel your buyer on how to handle home inspections slash conditions? That's a great
[00:02:27] Melody: [00:02:27] question, Mike. So firstly, my name is melody, as Mike mentioned, I'm based in Toronto and I'm with forest hill brokerage in your in Toronto.
[00:02:36] So going back to your question, Mike so here's three tips when a buyer's entering a multiple offer situation. So in today's market, it is so important to know the risks. So what has happened and what is continuously happening is that including a home inspection condition will likely mean losing the deal.
[00:02:54] But buyers should also know that not including the condition could cost them significant money and [00:03:00] repairs. Number two, perhaps looking at other home options. So try to see if there are any homes that don't look like they're going into multiple offers and that you could likely include conditions in your offer.
[00:03:12] A couple of options could include. Maybe there is a for sale by owner, a fisbo that the sellers perhaps more accepting conditions in the offer. Given other variables, maybe you could look into a home in a different location and a city that has more inventory. This is very rare, but it could be possible.
[00:03:32] Or perhaps you could be open to the possibility of flipping a home. So adding the home inspection condition and fully knowing the cost to repair the items, for instance, the roof, the wiring renovating, et cetera. And then selling the home at a profit perhaps. And lastly, tip number three, go with a more aggressive price and more money.
[00:03:52] So this is what we're seeing quite often. So, but let me tell you, it is not guaranteed, but it may be in your favor to offer a higher [00:04:00] deposit and a higher price and hopes that you can include the home inspection condition. And when the bid. This may also give you more peace of mind and also know that through a couple of conversations with the seller or the listing agent, maybe it is more money.
[00:04:14] Plus the ideal closing dates, plus the ideal your vocable dates. Plus I've also seen sellers as to say in the house a month after closing even three months after closing, it is crazy out there, but the evidence shows that you should always try to negotiate and make the seller happy with your offer.
[00:04:32] Mike: [00:04:32] Love it, melody.
[00:04:33] Those are some amazing tips. And you know, when when you see those deals that the that the seller's prepared to take a preemptive offer, would that potentially be the time to go in really aggressively early on, and maybe again tie in that condition, but you know, they're going to avoid having tons of traffic through their house, which, you know, a lot of homeowners want to avoid.
[00:04:54] Melody: [00:04:54] Yeah, absolutely. If they are looking at France of offers, that's a good opportunity for you to [00:05:00] go in with that aggressive offer. They may consider it. You never know. I always like to think if you don't try, you'll never know,
[00:05:08] Mike: [00:05:08] love it. Well, I'm going to, why don't we move over to Devo or Def are there any alternatives to not writing a home inspection condition in the offer, but still get your buyer peace of mind on the condition of that home?
[00:05:26] Davor: [00:05:26] I mean, yeah. With a multiple offer situation in order for our clients to offer to, for it, to look more appealing to the seller we're faced with the possibility of excluding the home inspection clause. So what buyers can do in this instance is if they like the property after persuade to bring a home inspector, we do a two-second viewing and have them do a limited scope inspection.
[00:05:48] So only look at the big-ticket items and the ones that will cost the most fixed. So, or you can bring a friend or a family member that's handy, you know, a contractor or general contractor or a [00:06:00] handyman somebody who knows what they're talking about. Your realtor can also look at the history of the home and MLS system and check with the next-door neighbors.
[00:06:08] I mean, you'll be surprised how much you can find out when you just talk to the neighbors around the property and what they reveal about the actual property itself. There is, there are definitely ways you can get around it. But you know, clearly, in today's markets we are faced with this inevitable situation where more closets you have included in the contract, less likely you are than the, that your bid is going to be a winning one.
[00:06:33] Mike: [00:06:33] Yeah. I love love your point on focusing on the big-ticket items, you know, and whether that's through a friend, a contractor, or a home inspector does, you know, that way, you're not going to get stung with the big-ticket. So that's, that's great information. So, Elise, I'm going to go over to you with the next question.
[00:06:54] You ready? I'm ready. What red flags do [00:07:00] best-in-class realtors watch out for doing during home viewings with their clients.
[00:07:07] Elyse: [00:07:07] Okay. So, hi, I'm Elise Bouwmeester with red and white in the Waterloo region. So I want to start by saying that we are not home inspectors by any means. We can not give you a thorough home inspection of a house we can, however, go through and kind of point things out.
[00:07:23] I know that you three can attest to this, that we spent a lot of time in school, learning about houses, how they are built things to watch out for lots and lots and lots of training, which is amazing. So I remember last month when I was going through with the buyer, she said, you know, I'm amazed at the number of things that you notice in these houses.
[00:07:42] And I was like, well, thank you. So some big things that I look for when I'm going through a house is I check at the ceilings. They look in the corners, I look for any watermarks. It's important to, you know, look, if there's a corner in the basement, there's a bow, a bunch of boxes piled up. It's hard with [00:08:00] COVID cause you are really honest not to touch things, but.
[00:08:02] Pre COVID post-COVID. Maybe we're kind of looking behind those items, lifting a rug up to make sure that it's not hiding anything. Some, when you go into a basement, sometimes you can see the wiring. So if the ceiling is covered with drywall, that's going to be hard, but then we'll be looking for, you know, knob and tube wiring, or old wiring or any signs of.
[00:08:22] Like warning signs. And then lastly, we just want to kind of go into the basement and look for any signs of a wet basement that could lead to, you know, foundation problems, maybe any signs of foundation cracks. So I just, personally, I know that when I go through a home, I'm not looking at the pretty decor.
[00:08:39] I'm not looking at the paint colors. I'm really spending my time trying to. Find those facts about the house that may deter my buyer from wanting to purchase it or pointing out and saying, Hey, look at the roof, it's in great condition. Or they just put this additional. So that half of the roof looks like it was just done in the front half of the roof.
[00:08:56] It looks like it's about 20 years old. So we [00:09:00] spend our time doing that while you look around and say, oh, I think my living room would look good like this, or my kitchen will look good like this. But like I said, we're not home inspectors. So it's so important to get that third party in there.
[00:09:11] Mike: [00:09:11] Love it at least. I mean, I think those are great suggestions, and let's face it. The buyers are going to be looking at, you know, as you said, you're not looking at, you know, the decor and you know, some of the features of the home, that's what the buyer's job is to do. Right. Your job is to do what you just talked about and you're going to, you know, dig in there.
[00:09:28] And if there is something to catch, I mean, I think that you're going to catch some stuff that and that's, that's what. You know, best-in-class realtors do.
[00:09:37] Elyse: [00:09:37] Can I say
[00:09:38] Mike: [00:09:38] one more thing? No, no. You're overtime. No,
[00:09:42] Davor: [00:09:42] I cut off,
[00:09:46] Elyse: [00:09:46] but I hear that a lot. Okay. I also think it's super important to know. The, like what's happening in the location of the house too.
[00:09:56] And that like, so how's that we almost put an offer in on [00:10:00] last month was close to a safe injection site. So I think that kind of stuff is important for us to pay attention to also because it could be unsafe, you know, if you're going to have children in the home. So not only paying attention to just the house and the physical structure, but the outside of the house and what it's backing onto and kind of stuck to
[00:10:17] Davor: [00:10:17] one dip that I wanted to add in terms of a basement.
[00:10:22] It's the smell. That's the easiest way you can, you can figure out whether the basement has any, any, any dampness or any damage. You just smell, it smells damp. It smells musty. If there's something like that, then obviously you need to get a professional. And so to look into it a little bit deeper, but that's my first giveaway, just the, in the basement.
[00:10:43] Mike: [00:10:43] that's awesome. That's awesome. And you know, guys, I think that, you know, when I think of a buyer today, not putting a home inspection in place scary. Yes. But you know, you just spent, you know, a number of minutes here, you know, pointing out some great. Best-in-class stuff, [00:11:00] you know, that realtors can do on behalf of their buyers to ensure that they help them, you know, not get stung as I started with, with thousands and thousands of dollars in repairs.
[00:11:10] So you know, with that the format was a little different today panel, right? I mean a little bit more Q and a wise, and that's what I think we would like to do, you know, for our future discussions and you know, to anyone tuning in, I mean, we are not. Yeah, experts. But what we do is we have a team of researchers, you know, looking at, no, we don't have a team.
[00:11:33] We do the research of course,
[00:11:41] on behalf of you guys, he spent a lot of time. So that gets you the answers and you know, looking forward to Next week you know, with another topic and some work una and you know, with that a great week, everybody.
[00:11:58] Elyse: [00:11:58] Yeah. [00:12:00]