Posted on Oct 21, 2020

Home inspections: Don’t buy a home without one!

mortgages canada

A home is probably the single biggest investment most Canadians will make in their lives. That’s why it’s important to make any sales offer conditional on a home inspection says 8Twelve Mortgage Agent, Zeynep Babir .

“The home inspection looks at the structural soundness of the house and the mechanicals: Are there any structural issues? Are there mechanical issues in need of attention?” explains the Toronto-based mortgage strategist.

By identifying any concerns with the home’s major systems (roofing, foundation, electrical, plumbing, heating, interior/exterior), a home inspector can give buyers a head’s up on potentially expensive defects in the property.

With this information, the buyer may ask for a price reduction to account for the repairs and upgrades. Or they may request the sellers complete the repairs before the sale’s closing date. In some cases, they may even choose to walk away from the house completely.

A HOME INSPECTION CAN SAVE YOU MONEY – AND GRIEF

In spite of the high stakes involved, home inspections are not mandatory: “A buyer can choose not to have a home inspection done – but it’s not the right decision,” says Babir.

“You always want to make sure whatever property you’re buying doesn’t have issues down the road ,” to the best of your inspector’s expert eye and diagnostic skills, she explains.

Although a home inspection is an out-of-pocket expense, Babir says it’s one that could save you a lot of money and grief later – and that’s before we even get to any actual repairs.

For example: in some situations, a lender may require an in-depth home appraisal before approving financing on a home that has been purchased (typically required for uninsured mortgages). An appraisal combines elements of a home inspection with a market value assessment based on recent sales to assure the lender that a home is worth its purchase price.

If the appraised value comes in lower than the purchase price, then the lender is only able to finance the mortgage based on the appraised value, leaving the buyer with three options:

• Disputing the appraised value;

• Finding the money to cover the difference between the appraisal and purchase price;

• Or finding another lender and getting another appraisal done in the hopes it will come in higher.

If these avenues are unsuccessful, the buyer may be unable to complete the conditions of the sale, leaving them open to loss of their deposit and/or even being sued.

Booking that home inspection earlier would have uncovered major red flags before the home transaction reached this stage.

HIRE A PRO

A home inspection costs in the $300 to $600 range and averages about three hours as the home inspector explores the property indoors and out observing, testing and taking notes. Although this is an important job that requires a lot of skill, there is currently no officially mandated national licensing or accreditation. This means anyone can call themselves a home inspector or even treat it as a lucrative side hustle.

So: do your due diligence when looking for a home inspector, says Peter Weeks, RHI , president of the Canadian Association of Home & Property Inspectors (CAHPI).

Start by asking for recommendations from your Realtor, mortgage broker, friends and family – or scan online reviews – but only use that as your first step. Next, “look at a few things like experience, work background, education, and most of all: their credentials and designations. What associations are they affiliated with? There are many and some have more credibility than others,” says Ottawa-based Weeks, who has a combined four decades of experience in construction and home inspection.

Weeks recommends hiring a home inspector with the Registered Home Inspector (RHI) designation used by CAHPI and the Ontario Association of Home Inspectors . Although membership in either professional body is voluntary, each group maintains strict professional background, education and training standards , and adherence to its code of ethics.

“The RHI [designation] is not easy to obtain. There are many hoops that an RHI inspector must jump through in terms of education and experience to obtain that designation. Ongoing continuing education is required annually to maintain the designation,” he explains.

LEARN MORE

Hiring a home inspector may feel like yet another extra step in your homebuying process, but remember: the hours you spend vetting and hiring a professional RHI, and the half day you allocate to the inspection itself, could save you hours of stress and thousands of dollars down the road.

 
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