Home inspectors vs real estate agents

Garth Turner is talking about youngsters buying their first semi or detached house and how the facts presented by the house inspector is boo-booed by their real estate agent.

Afterwards, I will tell you why a home inspector is required when buying a condoinium re-sale.

Re-printed from
The Greater Fool
14 April 2014
Do these kids actually know what they are purchasing? Especially when it comes to decades-old semis in ‘emerging’ neighbourhoods when former owners were too busy surviving to maintain their dumps?

Roger thinks not. He’s a home inspector who would like his Ontario company kept out of this blog because, “I can’t afford to slap the hand that feeds.” I think you might want to hold down a hipster, and read her this:

I get a ring side seat to the house horny in all of their glory.

First question I ask my clients is this: “Do you have any concerns regarding this home that you wish to address today?” With younger clients, the answer is, “Yes – we want to be sure that there is nothing here that will cost us money to fix. We won’t have a lot of cash kicking around after we purchase this home.”

At this point my radar goes up. Why? Because these nice people, try as they may, have scrimped and saved but they just don’t have a lot of money – but what they can afford with their modest down payment is what I’d call a sock burner. They’re often older, dirty and unkempt houses, so after I’ve been in them I don’t bother washing my socks – you’re better off just to burn them.

Sure, they have some fresh paint over the cracked plaster and maybe someone slapped in a Home Depot special kitchen, but at their heart they are disasters. Rotten structure, failing masonry work, asbestos, knob and tube wiring, galvanized plumbing, mould and water leakage, old HVAC components and roof coverings as well as a host of other items that are expensive to correct and insure and may make the home difficult to resell in the future.

Once I’m done with my assessment, this is where the realtor’s really need to turn it up to 11. We’ve now determined that this “cozy, move in ready” home will likely require between $40-50,000 in work. This is due to the fact that prior owners have not looked after or updated the home. The realtor takes the clients aside and tells them that my estimates are for worst case scenario, I’m embellishing a bit, I’m ultra conservative and the realtor really thinks that they can do this – they know their clients! Plus, they know “a guy” who can help them with the renos – for cash! They (the agent) have the paperwork right here (waiver) and they need to get this baby firmed up so the clients can become proud, new home owners. Remember too, the vendor’s going to continue showing the home and the next person might swoop in with a clean offer  And if all that was not reason enough to just rush in and sign, if they don’t take this home, it’ll mean another 3 weeknights traveling around and looking at houses.  That’s a crazy waste of time!!!  Just sign here…

Everyone is horny now – agent, buyers, sellers. Everyone.

Then I get a phone call a couple months down the road. Same couple. They now have some concerns. They were firming up the terms of the insurance and their insurer has insisted that within 90 days of close, the galvanized plumbing and all knob and tube wiring need be replaced, or the policy will be deemed void. They are facing the potential of having no insurance, which means no mortgage.

They’d like to know how I missed this. I subsequently direct them to pages 46 and 63 of their lengthy report (which I take enormous efforts to write and no one ever reads), where it indicates that such materials are present and they are advised to seek the services of a qualified plumbing/electrical contractor to further investigate to determine the extent of such materials and systems installed, evaluate their condition and correct and/or replace as required, based on the contractor’s further evaluation. I suggested they budget for significant cost associated with the replacement of such systems as required and also indicate that their presence may inhibit their ability to insure the home. Other end of the phone – silence.

Once the nice couple can begin to form words again, they tell me that their agent said I was being “very conservative in my assessment” of the home and they figured they’d be able to spread the costs out over the next 10 years. They never expected this. Now they are facing $10,000 in repairs in the first three months. The couple is no longer (house) horny.

If they did their due diligence and really thought it out they probably would have concluded this wasn’t the place for them and kept looking or sat on the sidelines for a bit and continued to rent. Instead, they are going to need to get second jobs to pay for electrical and plumbing systems that really won’t add any value to their home.  No saving for retirement. The idea of starting a family, the reason they wanted bigger digs, is pushed out indefinitely for the time being.

Agent’s happy though.  They have their cash in hand and like Teflon, nothing will stick to them. Rinse, wash and repeat.  See the same thing over and over.  Agents rushing clients into quick sales and wiping their hands clean after the fact. Lives destroyed or at least significantly interrupted.

I’d be the first one to tell you that very, very, very few realtors actually have their client’s best interest at heart.  So many are in it for the quick money, the “prestige”, their face on the back of buses. Especially the younger ones.  They show up in their $75,000 car, dressed in fine clothes and looking every bit the successful realtor.  A rock star really.  Fact is they’ve never sold a home before and couldn’t tell the difference between their ass and a hole in the ground.

The industry as a whole needs to be cleaned up and some oversight with teeth put in place.  Until that happens, I’ll continue to watch nice people struggle through significant hardship because they were deceived by the one person they thought they could trust.

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