Recently we bought a brand-spanking-new furnace and air-conditioner for our home! For the amount we paid we could have vacationed in Hawaii or some other tropical oasis. Last year we replaced our roof and installed a new gutter system. I can assure you, from a financial perspective, these renovations were equally as unexciting and uninspiring! Although the costs to upgrade our home were not related to a recent home purchase or a bad home inspection I highlight these because there is nothing less fun than having to spend your hard-earned money on things in your home that you never see or appreciate after they are installed. I swear, no friend has ever taken me on a tour to see his or her new heating and plumbing system or upgraded electrical box! Its even less fun when you spend a small fortune on a resale home only to find out there are some major, unexpected (unexciting!) expenses that come as part of the package.
An experienced home inspector can help identify current and potential issues that may affect your real estate investment (and pocketbook) BEFORE you buy, and ensure your money goes toward something more exciting than a major repair! Buying a home without a home inspection is sort of like buying a used car without taking it to a mechanic first. I always recommend buyers hire a qualified home inspector prior to waiving conditions. Cost to hire a Home Inspector can range somewhere between $250 and $700 depending on the size of the home, age and other special structures, and has saved some clients the headache of major unexpected costs after moving in.
In this article I will explore some of the common mistakes misinformed buyers can make during the home buying and subsequent inspection process that can end up costing them. I will also give some suggestions on how to avoid these common roadblocks to help this part of the home buying process proceed more smoothly.
- Rushing through the Home Buying Process
In 1997 Matthew Perry and Salma Hayek starred in the Movie “Fools Rush In”, a movie that cautions, among others things, against being impulsive. However, contrary to the movie’s title, in markets like Calgary where houses are sometimes sold before they even get listed, quick decisions can be the difference between getting a home or losing out on the opportunity. And here’s where the problem lies…many fall in love with a home without knowing if the property has any major structural, safety, or environmental risks (ie. issues with the foundation, electrical/wiring or mold/pest issues).
So how can you avoid this pitfall? First, you should not feel pressured into making a decision prior to the home being inspected. In most scenarios I recommend taking time to ensure you are making an informed decision before putting in an offer on any property. I recommend viewing the home in both the day and night and noting any concerns early in the process. This way issues can be highlighted and resolved prior to the sale closing. Subsequent visits to the home should include examining the condition of the walls, flooring, doors, appliances, and plumbing. Even new and nicely decorated homes need to be closely inspected as there can be issues not visible on the first viewing. If the home still looks good to you after a couple of visits and you’re getting serious about the purchase, then you are most likely ready to hire an inspector. If you sign a contract before inspection, consider including a clause that the sale is contingent upon a satisfactory home inspection, and specify when the inspection is to be carried out. That way, you are safeguarded.
On a side note, your realtor should directly ask the seller and the listing realtor if there are any problems with the home. The seller and their realtor should answer you honestly and not hide any problems that they know about.
- Choosing an inspector for the wrong reasons
When you choose an inspector, you’re selecting the professional who will give one of your biggest investments a full examination. You will want to choose someone you know who is competent, thorough and trustworthy. Unfortunately, too many buyers just go with the cheapest inspection company or choose an inspection company based solely on the advice of a friend or their realtor. Regardless of how you find an inspector ensure you consider two or three before determining who you feel most comfortable with. Check out company reviews and ask for references from recent customers. You can also call the Better Business Bureau to check the business complaint history (See below for contact information).
- Not knowing your home inspector’s education, qualifications and experience.
Always ask your inspector about licensing, professional affiliations and credentials, and whether the inspector carries errors and omissions insurance. This should include information about his or her educational background, years of experience, courses taken, and qualifications. Find out whether your inspector has taken any continuing education courses to keep up with new construction materials and requirements? Ask your inspector if he or she knows and understands the Alberta Building Code changes to it throughout the years. Older homes may have passed inspection in the year it was built; however, new renovations and homes have to meet today’s building codes.
According to Service Alberta inspectors must have:
- A licence from the Government of Alberta. (“To have a licence, a home inspector must be employed by a home inspection business, and be a Registered Home Inspector (RHI) or Certified Master Inspector (CMI), or have a degree, diploma, or certificate in home inspection from an approved school, and pass a test inspection by a CMI from the International Association of Certified Home Inspectors Alberta, or a RHI from the Canadian Association of Home & Property Inspectors, or hold an approved home inspection designation from an approved industry association, or a licence from an approved regulatory body”).
- A bond or other form of security
- Errors and omissions insurance.
Under Alberta’s Fair Trading Act an inspector must disclose information honestly and openly, and deal with you fairly. The Home Inspection Business Regulation sets out specific rules for home inspectors and home inspection businesses. The regulation also sets out the requirements for home inspection contracts and for the inspection report that the inspector provides to the consumer.
- Not going along on the inspection
There really is no replacement for walking through a house with a qualified inspector, listening to his observations and comments and having a chance to ask questions. The written report you will get from your inspector often doesn’t give you nearly as clear a picture of the condition of the house as one might think. Therefore, I encourage my clients to accompany the home inspector throughout the home. In some cases where clients have been unable to attend their home inspection, friends or relative have joined the inspector instead. In these cases or when clients aren’t present, I recommend they try to talk to their inspector by telephone as soon as possible after the home inspection.
- Not being prepared and informed prior to the inspection
Some buyers arrive at their home inspection unprepared. Because they are not aware of what is involved in an inspection they miss out on opportunities to capitalize on their inspector’s expertise and get important questions answered.
Before starting the home inspection, your inspector must give you a copy of the signed contract that includes a list of what will and won’t be inspected. Be prepared to read the contract carefully and make sure you understand it before you sign. Talk to your inspector about adding anything else you want inspected. The home inspector is responsible for inspecting only what is listed in the contract. Be prepared for the time commitment of a home inspection. Depending on the size of the home and other conditions a thorough inspection can take between 2 1/2 to 4 hours and this can be daunting for a buyer who is unaware of what to expect.
The home inspector’s role is to tell you the physical condition of the home. The inspector should walk through the home with you and point out any problems. A comprehensive inspection includes a visual examination of the structure from top to bottom, including the heating, air conditioning systems, the interior plumbing and electrical systems, the roof, visible insulation, flashing and chimney, walls, ceilings, floors, windows and doors, the foundation, exterior including lot grading, walkways, driveways, retaining walls, patio and decks, basement and visible structures. All of the above items must be listed in the contract for inspection, unless you agree otherwise by initialling. According to Service Alberta, if the home inspection does not include the inspection of mould or asbestos, the contract must include a statement, initialled by the consumer, indicating that fact. Attached garages or carports are included in the inspection. Other outbuildings or structures not attached to the home are only included in an inspection if they are specified in the contract.
The inspector must not damage the home during the inspection unless the owner agrees in writing to allow an invasive inspection. This means the inspector usually can’t drill holes to look inside walls, ceilings or behind tiling. An inspector can, however, look for signs that there might be problems with a home and suggest any areas that should be looked at by an expert. For example, mould and wiring behind walls usually cannot be seen directly, but there might be other signals that a trained eye would notice. Following the examination, the inspector will provide a report that not only points out possible defects or areas of concerns, but also the positive aspects of the structure as well as the type of maintenance that will be necessary to keep the home in good shape.
- Not knowing the out of pocket cost to fix the issues identified
Common problems encountered with resale homes typically include poor maintenance, and well-intentioned, but poorly executed home renovations. It may help to know that home inspectors in Alberta are prohibited from giving you an estimate of the cost of any repair they identify during the course of their inspection. Repair costs/estimates should come from qualified individuals who specialize in the area. If the issues are major, buyers and their realtor need to evaluate the age of the home and the severity of the issues that were found and come up with the best strategy for a successful negotiation. Note: sellers of older homes often won’t fix everything, particularly if you negotiated a large discount on their price.
- Having unrealistic expectations of your home inspection
The purpose of the home inspection is to find major issues that would make a buyer not want to move forward with an offer or would want the concerns fixed. It is not a buyer’s opportunity to change the agreed upon terms in their offer for a minor issue. Furthermore, a home inspector cannot predict future failures of any items, components, or systems within the property.
Regardless of whether the home you are buying is new or old, a good home inspector will likely find some existing issues with the home and can make you more aware of the condition of the property to help reduce your risk. However a home inspection cannot eliminate your risk. A buyer who expects a home to be bought in perfect condition is being unrealistic and is not getting good advice from their buyer’s agent.
My final piece of advice
Although inspections are important for protecting your real estate investment, it’s important to stay focused to reach your goals. It’s easy to get hung up on small issues during negotiations. If you have found a good home in your price range and you are not taking on major costs or safety risks, it may still be a good decision to purchase the home. Make sure you are prepared and ready to take this step. Working with a competent real estate agent and a qualified home inspector will help you through this process.
IMPORTANT CONTACT INFORMATION
For complaint history of home inspection businesses, contact:
Better Business Bureau of Central and Northern Alberta
In Edmonton: 780- 482-2341
Toll-free: 1-800-232-7298 http://edmonton.bbb.org/
Better Business Bureau of Southern Alberta and East Kootenays
In Calgary: 403-517-4222
For information to help buyers and sellers, contact:
The Real Estate Council of Alberta (RECA)
See RECA’s Property Inspection Request form at http://www.reca.ca/consumers/content/consumer- information/consumer-tools.htm
HOME INSPECTION ORGANIZATIONS
Canadian Association of Home and Property Inspectors (CAHPI), Alberta Chapter
Toll Free: 1-800-351-9993 http://www.cahpi-alberta.com/
Canadian National Association of Certified Home Inspectors (CanNACHI)
International Association of Certified Home Inspectors (InterNACHI), Alberta Chapter
SERVICE ALBERTA Consumer Contact Centre:
In Edmonton: 780-427-4088 Toll-free in Alberta 1-877-427-4088 http://www.servicealberta.ca