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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