Would you sell a house built in the 1940s to your mother without a home inspection? Would a happy buyer and the potential of repeat business be of higher importance and morally just, rather than a quick commission? One would think so, but it’s not always the case.

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The recent frenzy to offer blindly on a property in multiple offers often results in the successful buyers having serious buyers’ remorse. A seasoned, reputable agent would hopefully recommend a home inspection on a 75-year-old property, but sadly some of my clients have not been so lucky and have been guided by someone with less experience and more interest in a quick commission payout.

As a home inspector for 13 years, I can say I’ve pretty much seen it all. It’s always been a positive experience working with excited buyers and investors. While a few times a year a buyer armed with a full and comprehensive report will walk away from a property, those who proceed do so knowing what they may be facing to rectify deficiencies and plan for future end-of-life systems like a new furnace, AC unit or roof. Both those that walk away or proceed and purchase are happy to have been able to make an informed decision.

This overheated market is now generating buyers who have maxed out their budget and now have buyers’ remorse. Pressured to buy without due diligence because of multiple offers and tight schedules, many book a home inspection after the closing date but that is often too late.

Having spent top dollars, and possibly $100,000 over ask, they have a limited budget to deal with unexpected defects. The young inexperienced selling agent has since driven off in his Mercedes to check on his dog walker, cleaning lady and hot tub temperature (as posted and boasted on social media) and grossed a whopping $20,000 commission. That commission would not come close to covering the major deficiencies of their client’s new home that can go undetected until it’s too late.

Having to deliver the facts on a post-closing-date inspection is starting to feel like a doctor delivering difficult news to patient who is seriously ill. Seeing a buyer near tears on what is supposed to be a happy, new and exciting chapter in their life is not fun.

A recent client had some costly and concerning findings. Lead water supply pipe – a major concern for a young family. A furnace 19-years-old, AC 38-years-old, asbestos and 60 amp electrical service, basically rendering the home uninsurable until upgraded to a minimum 100 amp service.

These issues alone could cost $25,000 to $30,000 before the planned kitchen renovation or new windows.  Most of these items would have easily been discovered by a well-seasoned agent who has dealt with 75-year-old homes, and who would have recommended a home inspection during the seven days the house was being shown before offers were due.

Those smiles and eager looks of a first-time homebuyer fade quickly into the reality that they have some serious issues to remedy, potentially delaying that new kitchen and windows they had planned. They are not happy with their agent either.

Most of the agents I work with will find a window prior to when offers are due to schedule a home inspection that follows the industry Standards of Practice and provides buyers with a comprehensive report. Sometimes the buyer decides there is too much work and declines putting an offer forward, but generally they proceed with the information they need to make an informed decision and offer that will allow them to address key deficiencies that were disclosed before making an offer.

We all know it’s not a great time in real estate. Competition is fierce for buyers and agents alike. Agents are suing agents; buyers are suing agents and underhanded deals and games of the trade are putting wedges between those who are supposed to represent the needs of both buyers and sellers. Offer acceptance dates are being cancelled because of bully offers (that often puts the listing agent in the position of double ending the property). Winning bidders are being told “there are some very competitive competing offers” that are actually below theirs, and they end up over-bidding themselves. This is creating distrust in the industry.

House prices have increased approximately 35 per cent and so have commissions. All during a pandemic when some can’t put food on the table or pay rent. Seems a little off-putting when the listing to sale date can be two to five days and approximately $50,000 commission is paid out and the buyer is often left with buyers’ remorse.

So again, would you sell a 75-year-old home to your mother without a comprehensive home inspection? Do you want positive feedback, happy clients and a highly rated recommendation as a professional poised for a long and prosperous career? Or do you want the reputation of a Mercedes-driving salesman looking out for himself and ending up in court?

As a very seasoned (30-plus years), respected, professional agent recently said to me, “We created this environment and we need to fix it.”  She was referring to the current practice of list low, generate lots of interests and offers and drive the price up while disappointing prospective buyers. Now when a property is listed at an appropriate price, potential buyers don’t even look because they expect the price is artificially low and it will sell for $100,000 or more over ask.

Let’s hope things change quickly for the benefit of everyone.

Mike Hayes CAHPI RHI
National Home Inspector #NHICC00550
Ottawa

20 COMMENTS

  1. Fully agree that inspections should be encouraged but with buyers losing out on a number of homes before getting ‘the one’, how feasible is it for them to “pre-inspect” before placing an offer? At $500-700 a pop for an inspection and offer prices being a guessing game at most points, many buyers simply watch their hard earned money for down payments dwindle away in this market. After offer 3-4 in this market and thousands spent, that can’t be sustained and buyers lean on their professional to guide them. Should inspections be done? yes. A listing agent supplying a report can be a huge liability for a seller – could that also not be argued that it wouldn’t be representing a client professionally? Real estate professionals should be advising their clients on their abilities in this market and options surrounding those. I agree, there are some in the business that are money hungry, such as with every profession – even inspectors. The narrative should be to shop for an agent that is willing/can demonstrate knowledge no matter what the market is like instead of lumping all in the profession into one basket. Would you like it if that were done to you in your profession? The Sellers market is driven by lack of supply and city planning with a sprinkle of other overheated markets being unsustainable for buyers hence they’re moving to ours. It is a trying time for buyers that are simply trying to find a place to call home and a ‘good’ one at that, sowing discord to allow them to think that they don’t need a professionals help when Sellers can get away with listing a home with issues would be a mistake and create further havoc in the lives of buyers down the road. I’d much rather have the help of someone who has a fraction of the knowledge I could need versus no knowledge at all, or worse, from someone who thinks they have the knowledge.

  2. First CBC, now REM is giving just about anybody a platform to bash a group of professionals. No fact checking, no one else being interviewed. Looks like journalism is going down the toilet along with future referrals to said inspector.

  3. Perhaps the author should get his facts straight about why the market is where it is. He obviously has no love for Realtors. Don’t bite the hand that feeds you Mike.

  4. Perhaps the author would be better suited to give more concrete and feasible ways in which to navigate the current market instead of lambasting other professionals? In this closed knit real estate community, the need for such pointed comments makes you question the author’s objectivity, doesn’t it?

  5. I might have found a point to this article but I may have also lost the point when the author slides into tired critques of a young broker.

    I am sure the industry could do with professionals who are out to change things for the new buyer but the punitive attacks and tired stereotypes may belie the motivation here.

    Hopefully a more constructive approach would work for everyone involved.

  6. As a listing agent you owe a duty to your Seller client to obtain the highest price possible for the property. As a buyer’s agent you owe a duty to the Buyer client to advise them in purchasing the home they decide to purchase. No agent is the ultimate decision maker – we are advisers, engaged in marketing and negotiators. We do not set the end sale price or the terms of the agreement. While I wholeheartedly disagree with the listing games (list low, coming soon, offer dates that are not adhered to) the Buyers are choosing to participate KNOWING the current market. Market value = what a Seller is willing to take and what a Buyer is willing to pay. Remorse is not part of this equation. Home inspections are not infallible and if buyers are opting out they do so willingly. There is nothing “fair” about the market now, any more than it was “fair” to the seller when Buyers held the upper hand. Most importantly: I don’t drive a Mercedes, 90% of our business is repeat clients or referrals from clients and yes, I would let my mother buy a 75 year old home without a home inspection.

  7. It is funny we have a Home Inspector dictating to REALTORS. Home Inspectors have full coverage disclaimer. While he is basically correct, the question is all RE Agents are not equal and neither are all Home Inspectors. I have seen a lot of home inspectors go looking for problems a with no advice on the cost and alternatives of the fix and lost some poor single mother the chance to buy her dream home. Oh in case you are wondering I spent 13 years as a journeyman carpenter and building contractor.

  8. I absolutely agree. This market is full of lies and deceit. There’s very little common courtesy and common sense.

  9. It is the inspection model that needs a tune up. How about a policy such as hold back on offers requires an inspection report in order to be posted on MLS. If we can change Master Bedroom to Primary bedroom anything should be possible. I dislike regulations, but to create the ideal situation for a seller to get all of the equity they deserve by setting it up for multiples, perhaps any listing that has a holdback an inspection report should be mandatory to post on MLS. While it is buyer beware and it is up to the buyer and their agent to do their due diligence, when that option has been manipulated out due to the structure of the listing, it does seem a bit unfair. Then when an inspection report is sugar coated, nail the inspector!

  10. One solution that I have seen primarily in the Toronto market is have Pre-Listing home inspections. These are inspections that the listing agent pays for prior to putting the home on the market. When prospective buyers are interested in the home the listing agent will offer the Pre-Listing home inspection for the buyer to review prior to submitting an offer. I think this is a great way to provide full transparency in a market that is so competitive. It allows a buyer to make an informed decision. I don’t think the lack of home inspections is the selling agents issue. Competition is the issue. Listing agents can do something about it by shelling out $500-$600 for a Pre-Listing home inspection up front so buyers feel comfortable with the risk of a firm deal. This is our problem that we all have created and we can solve it.

    • in a sellers’ market listing agents have zero incentive or need for a pre-list inspection. it would be nice if it was mandatory in order to GET your house listed.

      as to the “quick” commissions buyers’ agent are getting according to the writer, try finding a suitable house in an extreme sellers’ market “quickly” minimum average number of houses I have to show is around 15-20. 15 minute showings at one point. then you make 4-5 offers losing each one before we finally “win” a house. 4-6 week selling cycle in my market. if that is “quick” I would hate to get a slow buyer…. because that NEVER happens.

  11. I’m sure the home inspector has some reason to denigrate agents the ways he does. However, my experience is that of agents with a great sense of responsibility and housing knowledge and very few buyers having remorse.
    The picture of the arrogant, almost rich real estate agent is laughable and the writer demeans himeself for painting such a false picture.

  12. This article started off right on the money. Any agent who does not do everything in their power to ensure their client is fully informed and given the opportunity to inspect a property before making an offer (or during a currently-rare conditional period) should have their license revoked. Or should find themselves without clients after word gets around.

    Unfortunately, the author meandered from the path into tropes about agents making too much money and critiquing pricing strategy that is in fact exactly in line with his original premise: working in the best interest of the client.

    We represent sellers too, and right now the pricing strategy that works best for sellers is to list low and hold back offers for several days. If buyers are offering more than they should, not doing their diligence (inspecting, assessing market value as well as possible, sticking to their budget) that is on them and yes often on buyers’ agents for not informing and protecting them. But that is not the fault of the pricing strategy.

  13. I can’t recall the last time I called my home inspector for a property inspection. Fortunately the properties my clients have shown interest in are not 75 yrs old, but newer and I am seasoned enough to red/yellow flag areas of concern. Thankfully, more often than not, my clients listen to me and we move on from red flag properties.

    Inspectors like Mike provide a much needed service to protect the buyer and the (inexperienced?) buyer agent, especially now. I would not want to be in any of their places these days.

  14. Well at least agents know how this inspector feels about real estate agents.
    Agents did not create this market – the market did that, and that is driven primarily by buyer behaviour. I am sure no agent “advises” not to inspect (neither would they so advise mom) – but they explain the impact of conditions will have on an offer in the current market.

    He also fails to mention most buyers are forced into offering on several properties before successfully buying – making inspections economically non practical- unless inspectors change their models to fit this current marketplace- just like any other business would do. Maybe offer $99 “gross error check” inspections that are paired down to a limited scope looking for large issues?

    Not sure what the solution to your business model is but complaining about vehicles agents drive and the money they make sounds more like sour grapes than an interest in finding solutions for your clients (buyers) in what is already a difficult time to be a buyer.

  15. The market dictates the terms and conditions you need to put in offers. In normal times all precautions are taken but with bidding at all time high you will Not be successful to win the property. You won’t have to worry if its a good house or Not!!! you just won’t GET one! Just the facts of current market. You could pre inspect and pay$$ for inspections many times and still not get the proper.

  16. “As a very seasoned (30-plus years), respected, professional agent recently said to me, “We created this environment and we need to fix it.” She was referring to the current practice of list low, generate lots of interests and offers and drive the price up while disappointing prospective buyers. Now when a property is listed at an appropriate price, potential buyers don’t even look because they expect the price is artificially low and it will sell for $100,000 or more over ask.”

    Absolutely true! In fact the entire article is true!
    Any agent that discourages a home inspection whether a new or older home, does not deserve to be in this profession!

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