While no one can prevent accelerated markets and bidding wars, professional home inspectors can offer additional services that help ensure Realtors and sellers don’t end up in a legal battle with buyers who opted out of an inspection and then found out about serious issues within the home.

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In a hot market, when any of the big three conditions – financing, insurance or inspection – are waived to “give buyers an edge” over the competition, buyers can say they felt pressured by, or received guidance from, their Realtor to waive conditions and make their bid more attractive.

So what happens when they win a bid only to discover the foundation is cracked, the roof is leaking, the house isn’t safe or there are rodents in the attic?

The buyer has moved into a home that’s unsafe and perhaps they can’t even afford to fix it because they paid well over asking. The buyer may then sue the buyer’s agent for pressuring them to bid with no conditions. They may also sue the seller’s agent and the seller for not disclosing problem areas within the property.

The seller’s defence is they checked “don’t know” on the disclosure statement to try and protect themselves and the seller’s agent. The seller’s agent denies knowing anything. They had their seller sign a release from all liability to try and protect themselves and their broker.

Any judge who looks at this situation expects the seller’s agent to know better. The courts will uncover if the previously flooded basement and rodent traps in the attic, for instance, happened while the seller lived there. Plus, if an insurance claim was made, it will be clear that the seller knew about previous issues with the property.

So how do Realtors protect themselves and their clients?

If you’re the buyer’s agent, it’s important to look past winning the bid for your buyer at any cost. And if you’re the seller’s agent you may be purposely wanting to create the frenzy of bids with no conditions. But have you thought about the fact that a hot market is the perfect time for people to dump problem properties?

We understand that a traditional inspection is difficult in an accelerated market. Some sellers are no longer accepting offers with an inspection condition, which means buyers who include it will lose the bid.

In response, we’ve created solutions to help alleviate risk for all parties. This includes:

Pre-listing inspection.

This full inspection protects the seller and seller’s agent and provides the buyer with transparency. Many selling agents are even paying for this service on behalf of their sellers and including it in their listing offer. In this case, sellers can justify not accepting a condition of inspection because they’re able to provide the digital inspection report upfront to every interested buyer. This service also comes with an option to have an inspector return after the buyer wins the bid to complete a full walkthrough with the buyer, which enables them to be further educated on the property, receive an updated report and benefit from the transfer of all warranties. This dissolves any fear of bias as the inspector is now obligated to the buyer.

Pre-offer advisory service: verbal consultation.

While this service doesn’t replace the value of a full pre-inspection, it offers some added support to the alternative where there is no professional guidance at all prior to buying a home. In this instance, an inspector joins the potential buyer during their viewing of the home. The inspector surveys major systems and uses specialized technology such as infrared thermal imaging to take a deeper look at the property. The inspector then provides a verbal consultation at the end of the viewing so the buyer and agent are at least made aware of major problems before bidding on the property. If they win the bid, the inspector can then return to complete a full inspection and provide a thorough report.

Homes across the country are selling like wildfire right now – and often over asking thanks to accelerated markets triggering bidding wars due to high demand, low supply and rock-bottom mortgage rates.

But at a time when buyers often don’t feel they have the liberty to include a condition in their offer pending a home inspection, it’s more important than ever for sellers and their agents to take steps that protect them from hassles and even possibly a lawsuit if something major is uncovered after closing.

6 COMMENTS

  1. Problem during a pandemic: Only the Realtor & maximum of two buyers who will be on title are allowed into the home. Not going to be able to get an inspector in. Also, pre-list inspection is for the person who paid for it (the Seller) and no inspector that I know warrants it carrying over to a Buyer who is not their client.

    • Good point Dawn. Same goes for an appraiser’s opinion of value. The report only applies to the purpose for whom the report was contracted on behalf of, and only for the day that the report was signed off on. All bets are off thereafter and for whomever other than the original signatory to the contract.

      The old axiom still applies: Buyer beware. Either know of which you are offering on, or be prepared to accept responsibility for any oversight on your part. Don’t be two-faced—a seller hiding defects and, on the other hand, a buyer demanding/expecting perfection from another seller—all wrapped up in the same person. To do so would make one a stereotypical slimy politician without holding official office.

  2. Rick,

    I have read over your article on Waiving Inspections a couple of times and I am surprised by several suggestions and claims you are making. I have been in the Home Inspection business for 13 years. I spent 8 plus years on the Board of Directors of CAHPI and Chaired the Disciplinary Committee. I pride my reputation as a detailed, non alarmist who provides the facts that include positive attributes, as well as deficiencies and have constantly obtained 5* ratings from Clients and Agents who’s testimonials are posted on my website. In fact, one of your Associate Inspectors RM had me inspect a home for him back in July of 2019 when he was doing online courses toward becoming an inspector, and after a thorough inspection and report, he walked away from the property.

    Your suggestion to offer a Quickie walkthrough with a prospective buyer and provide a Verbal report breaks all the industry rules. I actually consulted with one of the leading Insurance Companies who offers Home Inspectors Errors and Omissions Insurance, and here is what Kim Smith of Hub International had to say.

    “ I have had a lot of calls regarding walk through inspections.No report no contract.

    There is no coverage on our policy, and I would assume with any insurance provider if there is no report provided.

    There is no way to defend an allegation or claim if the inspection was offered verbally only. In fact we always recommend that anything you say to your client should be noted in the report, to prevent a he said she said scenario.

    On the application for our program and the renewal application, it stipulates that a report has to be completed for home inspections.”

    Kim Smith Hub Internation

    I field multiple calls for a Quickie walkthrough and always decline them. My question is what is important? The HVAC, Roof, Plumbing, Electrical, Insulation Ventilation, General Interior, Exterior, Structure and the answer is always YES ALL OF THE ABOVE. Then you complete a full inspection.

    This week I completed an inspection on a 5 bedroom, 4 bath home built in 1981. It was up for Multiple Offers. Thankfully the buyers Agent always recommends an Inspection. My report identified over 87 defects in the home. Significant Plumbing, Electrical, Mold, Vermin, broken/old/damaged windows, leaking skylights, and End of Life HVAC. I was in the home for 3.5 hrs to capture all defects and take photos. I provided the buyer with a 28 page report that included 30 colour photos. This is what a buyer deserves when they are about to invest over $800,000. You CANT provide this in a Verbal Report. While Industry Guidelines don’t allow Inspectors to give Cost Estimates to Repair, this couple could easily be in the $20K range to remedy the deficiencies. With a detailed report, they can make that assessment and base their bid accordingly.

    There is a lot of pressure on Buyers to bid blindly on a property in this ridiculously hot market, and there are even Tag Teams of Agents who have a spouse, once a handyman, painter, wallpaper hanger turned Real Estate Agent who provides the Buyers with insight into the condition of the home they are about to buy from the Spouse / Agent. Not only is the a MAJOR conflict of interest, this person has NO formal training as an Inspector, follows NO Standards of Practice (as mandated by any Association of Home Inspectors) and carries NO Errors and Omissions Insurance.

    Our business now is often dealing with Homeowners who have Buyers Remorse. Having had Quickie by an untrained Agent/Spouse/Friend they have found many issues and call for a proper inspection only to uncover Vermiculite, Aluminum Wire, Leaking Foundations, Mold, Structural problems, and even 70amp fused service (Making the Home Uninsurable) to name just a few. It is much more rewarding to work with Buyers excited about the possibility of a new home, even if you have to provide a list of defects, than it is to work with a Buyers Remorse client and the possibility of time in court supporting the known defects that should have been disclosed.

    You also mention PreListing inspections, but keep in mind, that report is the property of your client, be it the listing agent, or the homeowner. While it may give a potential buyer peace of mind, they should always obtain an independent evaluation.

    Generally 3 or 4 times per year, a buyer will walk away from a property based on the Home Inspection. I know many Agents would blacklist your services if this happens, but thankfully the majority of the Agents I work with have their Buyer and Seller Clients best interests in mind and want them to be happy. Its not always just about the commission, its about serving your clients and doing what is best for them. This applies to Home Inspectors and Agents.

    Stay Safe out there and stay out of court.

    Mike Hayes CAHPI RHI C2000755
    National Home Inspector #NHICC00550

  3. Pre Offer Advisory service is NOT INSURED by E&O coverage if you even have it. No written report following full standards of practice and you will be in court with no support of your insurance lawyers.

    Is this a paid Ad? I see you advertise in Real Estate Magazine. Do clients and agents a favour and insist on a proper inspection. Ask yourself would you buy a home without an inspection?

  4. If as professionals we’re sincere about protecting consumers (homebuyers), then I believe this discussion (multiple offers-no conditions) needs to happen nationally.

    Under the REDMA legislation introduced in BC in 2004, a purchaser of a new home has the right to rescind their signed contract of purchase and sale within 7 days of making the agreement. https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/00_04041_01#section21
    If this had been included in legislation for resale purchases in BC, we wouldn’t be in this predicament.
    The Québec civil code allows a 10-day cancellation period for the promisor-buyer who has signed a preliminary contract.
    http://legisquebec.gouv.qc.ca/en/showdoc/cs/CCQ-1991
    DIVISION II – SPECIAL RULES REGARDING SALE OF RESIDENTIAL IMMOVABLES
    While I’m not familiar with the details or effectiveness of this in Quebec, the concept of recission (cooling-off) needs to be reviewed as a possible countrywide solution.

    The seller disclosure is another topic that needs to be reviewed in the name of industry professionalism.

    • Good argument, John. From a seller’s perspective, a 7 day rescission period similar in the REDMA legislation would not be favoured, however, I agree with you in that if REALTORS truly believe in protecting the public, our industry should support extending the same 7 day rescission period with resale transactions, though I lean more towards, like a subject clause (condition precedent) having a lawyer review the contract, having only the property information and condition up for review and not price, dates or terms.

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