House Inspection - you vs the unconditional offer

[DaveY]

In this summer`s Toronto market, my first offer of purchase got shot down when a competitor put in a firm unconditional offer.

I asked around and didn`t understand why a buyer would waive their home inspection. Below are some thoughts from a person that knows home inspections.

Please add your thoughts to this topic as I would like to hear the strategies on how to make my offers more competitive without loosing the home inspection.

Cheers,
DaveY

Advice from a home buyer and knowledgeable inspector:

When i was house hunting i quickly found out that most bids won unconditionally. I was ok with it since i would take a good look before making an offer. People do bring inspectors with them to a viewing before making an offer. You can ask your agent for a private viewing and have a good look then. I would still include conditional inspection until the bidding got tight.

Take a good look at the basement conditions. The house is being held up by the foundation so if it goes to crap you have a major problem. How long has the house been ok in the condition the foundation is in.

Basement may look rough but if the house is 60 yrs old and theirs no signs of serious cracking and /or repair than good chance it will be ok for another 60. check the basement thoroughly if its unfinished or partially unfinished alot of what you need to see is their plumbing, electrical, gas/oil furnace.

Look closely at the outside of a brick house for large structural cracks. The ceiling of the top floor will usually show lots of history from leaking and settlement.

if there are ceiling tiles on the top floor the actual ceiling beneath the tile is probably crap and with that the roof to. Stucco is always used to cover up beaten up ceilings. Just look closely and you will be able to tell what really happened with the ceiling/roof.

Anything/everything in a house can be repaired for a price. Don`t get to wrapped up in looking at the finishes it either needs replacing/fixing or it doesn`t. Be comfortable that the house isn`t actively falling apart.

People are taking a chance waving inspection relative to what they know or have been told. But having a home inspection done doesn`t guarantee anything really. If something goes wrong after the inspector said everything ok their not going to buy the house back from you.

Its rare for someone to be told not to buy by an inspector. They just tell you very nicely what they can see wrong with the house your about to buy and give you a pretty crappy estimate on what the repair cost might be.

Educate yourself as best you can and let me know if i can be of anymore help.

 

[mcgregok]

Dave,

In a balanced market you usually do not have a problem having a condition in your purchase agreement for a home inspection. In Calgary / Edmonton presently you can pretty much write what ever condition you want since it is a buyers market.

Most multipul offers occur when it is a sellers market .

If you are finding yourself in a position that buyers are not accepting your offers due to a home inspection try to learn more about what you are worried about. If you worried about cracks in the foundation then find out what it cost to fix a crack. In Calgary a crack can be repaired for $1100 per 5 linial feet. or you can do it yourself for $75 and 5-6 hours of grunt work. So a Leaky basement is not really scary.

Find out what things cost . It will make you more at ease with purchaseg.

Ask your realtor to ask the buyer if they have an old inspection report that they will leave on the table
so you can review when your view the home. I have founds many owners will if they have one. Also take your time viewing. Don`t get rushed.

You can also look at Condos. There are many apartment style that you may not feel you need an inspection since the common areas may be looked after by the board.

Hope this helps

Ken

 

[DaveY]

Thanks Ken, you`ve given me more points to add to my to-do list on my next viewing.

 

[FayWong]

I once placed an unconditional offer waiving home inspection. It was a sellers market with multiple offers. But I did not take a risk. The seller had said he was having showings Friday and Saturday and would consider offers on Sunday. I saw it Friday, arranged a second viewing for Saturday and brought the house inspector with me. I didn`t get the house, I offered over list, someone offered more. I had been considering a higher offer, I might have gotten the house if I had not had the house inspected. The house looked much better than it actually was. That $350 saved me a fortune. I guess the point I am trying to make is NEVER skip the house inspection, but you can find ways to skip the condition if the situation is very competitive.

 

[CarlaJohnson]

A few weeks ago a good friend of mine found her perfect condo. The seller wanted a quick closing, so he met her price and included the brand new appliances. She was very happy with the purchase and mistakenly thought a condo was a safer purchase, so she did not include the home inspection in her offer.

Being a firm believer in due diligence I contacted my own agents to find out what they knew about her new complex. The answer came back – MOLD. Lots of mold was in the entire complex and a gigantic special assessment was rumoured to be on the horizon.

Fortunately she had included another condition allowing her an exit, but it was a close call.

Here`s to knowledgeable agents and keeping emotions out of our purchases!

Cheers!

Carla

 

[Aneta]

Hi DaveY:

I am in the same situation as yours, the Toronto market is insane....good grief, with this hot market a home inspection is considered completely unreasonable ;o) I find that the prettier and more staged a home is, the more offers will be put in, most likely with no conditions...even though a lot of upgrading work is required such as update electrical, newer windows, remove oil furnace etc. People seems to be focussing on the wrong things. So, at this point, I am still looking but focussing more on the `unstaged` homes. I am finding that there is less frenzy around these, with an opportunity to actually put in some conditions in the contract. I recently put in an offer on a house in mid-reno. They had an offer day, I thought I would be lost in a sea of other offers...turns out I was the only offer! This support my previous statement about unstaged properties. I did put in conditions for financing, home inspection and fire code specialist inspection. They freaked out about the last condition (even though I clearly explained its purpose in my cover letter), but accepted the other two. Unfortunately, we could not agree to a price, but it was a huge learning experience for me.

I am not sure if I ever would forgo a home inspection for a property worth $300K+. If there is something majorly wrong (or costly to repair) , I personally think it`s too huge of a risk to potentially overpay and/or end up with a huge proplem on your hands and have trouble selling property. I would rather risk paying for a home inspection before offer presentation and potentially losing that money. Maybe after several failed attempts I will have enough knowledge from the previous inspections to take a risk....

Feel free to send me a note and update me on how your strategy is working!

 

[dplummer]

If your going to use a Home Inspector make sure you get a good one. A home inspection is just a visual. They don`t pull things a part. I guess if you don`t have any construction/restoration experience a second pair of eyes is good.I personally won`t spend the money. Doug

 

[NIZAROLA]

some of the home inspectors can do a walk-through inspection ... costs less... but you don`t get a documented report that can help you in the negotiation process.

you can opt for that if you need a professional input on what to expect ... specialy structural issues (the money pit)

I am guessing the buyers that won the offer with unconditional offers are mostly contractors or experienced investors that can detect the problem areas and estimate fixing costs, and submit an offer accordingly.

as mentioned above ... the key here is education... use the internet to dig vast amounts of info on that subject.

 

[clwenner]

I completely agree with many of you above most notably NEVER SKIP A HOME INSPECTION!! I am in the crazy multiple Toronto market & have placed home inspections as a condition of sale on every offer I have submitted. I lost almost all of them since they were in multiples. I then decided to skip the home inspection condition and replace it with one that simply stated "Subject to Purchaser(s)’ Lawyer(s)’ approval". It`s a cover your "you know what" clause without specifying why. Many unseasoned sellers & RE agents won`t flinch at it and it makes the conditions section very clean. I finally found a property and actually managed to buy it - this one wasn`t holding back offers and wasn`t beautifually staged but is a great solid home and investment. I did put a home inspection condition on the offer and luckily there wasn`t anything majorly wrong with it. Turns out I already spotted 90% of what the Inspector did. But if you don`t have a trained eye for renos, costs, and what to look for, it is essential to get the inspection. It will save you so much money in the long term. And, it`s a business write off!