Home inspections drop drastically in no-subjects market, leaving buyers with ‘horror stories’
Financial Post
By: Joanne Lee-Young
06 July 2016
Home inspector Vince Burnett has been in the industry for 17 years and
thrived in other red-hot real estate markets. He should be run off his
feet these days, but he hasn’t done a single home inspection in two
weeks.
As few as 10 per cent of homes sold in Greater Vancouver and the Fraser
Valley are being inspected before deals close, a number that is
drastically down from about 75 per cent a year ago, and an illustration
of the latest concern in a sizzling market where some realty firms and
mortgage brokers were already worried about a rising number of
so-called no-subject offers.
Buyers going after limited listings are lobbing these in because, with
prices spiralling ever higher, they are under intense pressure to find
other ways of being competitive with their bids.
The Home Inspectors Association of B.C. is calling on the B.C.
government to put in place a seven-day cooling off period to temper a
market where it says buyers have “tight timelines of as little as two
days from open house to making an offer in a competitive situation
(with) no time for proper due diligence, including a thorough
inspection. Fear of losing the home in a competitive bidding situation
has encouraged buyers to take the dangerous step of making subject-free
offers.”
Vancouver home prices head even higher in June amid record sales
The association warns it’s a precarious situation for buyers, but the
rise in subject-free offers has hit home inspectors hard, too.
“Usually in January there is quite a bit of work, other than in the
first week. Then you get into the spring season, March and April, and
it’s 10 or 12 inspections a week, and you are going,” said Burnett, who
is also president of the HIABC.
For years, he has been doing around 325 inspections a year, but right
now, heading into July with no sign that there will be any pickup, he
said: “I haven’t done 100.”
Shawn Anderson, a Vancouver-based home inspector, has his own gauge: “I
was refusing about 20 to 30 inspections a week a year ago. And then all
of a sudden, I was down to refusing two a week. People are buying
blind. Now, I am going in after they buy and looking at the horror
story.”
Anderson used to do very few inspections after a sale, but now some 30
per cent of his business is on homes that have already been sold.
People are buying blind. Now, I am going in after they buy and looking at the horror story.
“Recently, I had one house that was so catastrophic, it needed some
$350,000 in repairs. They were not expecting that at all because it was
newly renovated. But that only concealed all the issues. It was
lipstick on a pig. It needs a new foundation, piping, you name it, it
needs to be done,” said Anderson, who has been an inspector for six
years and was a builder for 25 before that.
The HIABC is warning more of these cases will likely emerge. On
Tuesday, it highlighted its point with the case of a Kevin Girard, who
bought an East Vancouver home without doing an inspection.
Last October, the 40-year-old and his spouse bid $955,000 on an older
home in Hastings-Sunrise. It was listed at $899,000 and “we heard there
were five bids. We were in the middle. We expected this and wanted to
have a differentiating factor.”
Ahead of taking possession, “we had asked if we could get in to do some
measuring for our furniture, but they wouldn’t allow it,” said Girard.
On moving day, they arrived to find “an absolute disaster,” said
Girard, who described the home as being “not safe for our one-year-old
daughter. That was the biggest problem.”
There were also holes in the wall, exposed electrical lines, flooring
that didn’t meet walls, kitchen cabinets sitting unevenly over dirt
floors covered in rodent droppings. The house, when they had seen it,
had been “staged. They had positioned things to cover up problems.
Drywall had been ripped out. There weren’t enough circuit breakers for
things like the stove to be powered. We had to MacGyver things to make
them work.”
Real estate agents have come under fire for fanning the heat of
multiple-offer situations with false claims that competing bidders have
higher and more appealing offers.
But Girard, who described himself as a financial planner with some 550
clients, said that when it comes to managing his own affairs, “I’m a
risk-taker. I probably wouldn’t have backed out. This was my shot in
Vancouver.”
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