By Rebecca Wissink
You’ve probably heard the age-old adage – buyer beware. At no time is this advice more prevalent than in scorching hot housing markets. Buyers might be going up against multiple offers, or the threat of multiple offers, and feeling pressured not to put any conditions on their bid, such as a home inspection. Data from industry insiders reveals that in some of the hotter markets in BC this past year, “more than 70 per cent of offers” were presented without conditions. It is very risky to skip a home inspection when one is considering buying an older home in the price range of half a million dollars plus. Would you consider investing $500,000 into a stock without researching the company first? Buying a home is the biggest purchase one ever makes in their life, and structural problems or rampant mold could create financial ruin. A 2020 Canadian report found that “42% of home buyers face unexpected repairs costing an average of $500 after moving into their houses; more than one in nine buyers must spend more than $1,000 for repairs.” While home inspections are standard, and good practice, they can fall by the wayside when markets go crazy.
To that end, British Columbia recently passed consumer protection legislation for buyers after years of an out-of-control housing market. The intent of the “cooling-off period” is to provide buyers protection, specifically in the form of time to obtain a home inspection and walk away from their offer if necessary. However, the details regarding what this cooling-off period will look like have not been decided. It is anticipated BC might follow Australia’s lead, "where the penalty in the capital region for backing out of a no-condition offer is 0.25% of the purchase price – $1,875 on a $750,000 purchase.” This penalty is intended to minimize frivolous offers that tie up the seller’s time and ability to close a deal. What if instead, BC had mandated a pre-listing home inspection as a condition of sale? No Canadian jurisdiction has done this yet; however, in late March 2022, a “national industry coalition of home inspectors” reported that “the federal government has pledged to introduce a Home Buyers’ Bill of Rights, which commits to ‘establishing a legal right to a home inspection.’” Again, what that will look like is anyone’s guess.
Another age-old adage is – knowledge is power. Home inspections provide deeper knowledge about a home, which allows both parties in the transaction to respond to information accordingly. Home inspections are important because they determine if any major repairs are needed on the home. But there is nothing that demands a home inspection be buyer driven. A pre-listing home inspection can ensure that the seller isn't surprised later by something significant they weren’t aware of that could derail a sale. Because, of course, a buyer’s home inspector may uncover something that drastically alters their desire to purchase the property and now the seller has lost the deal. Often, if something relatively minor is discovered by a home inspector, negotiations ensue, usually around the price or demanding that the current owner make the repairs as a condition of the sale. Which means that a pre-listing home inspection is a great way for the seller to prepare the home for sale. As the seller, having that inspection may reduce or eliminate negotiations and might help you close at or above the listing price. Pre-listing home inspections can benefit the seller in multiple ways, such as creating transparency and building trust with potential buyers.
However, there are both benefits and risks for the seller who is considering a pre-listing home inspection, which this article outlines. Perhaps the best option is to find a Realtor® who is willing to offer this service to you – like Ross Pavl!
Please contact an experienced Ross Pavl ELITE Real Estate Group Realtor® regarding any questions you have about home inspections or the Calgary area real estate market.
Photo via Flickr's Creative Commons courtesy of Fairfax County