Winnipeg Free Press - PRINT EDITION

Diligence is often a luxury for buyers

Inspections tricky when market is hot

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When Colleen Matchett-Smith bought her first house in 2000, she automatically attached a satisfactory home inspection condition to her offer.

Flip the calendar forward and times have changed in Winnipeg's hot housing market. Bidding wars are making some desperate buyers nix getting a home inspection.

When Matchett-Smith and partner Tim Goodwin purchased their five-bedroom River Heights home together last November, they didn't consider having a home inspection or adding any conditions to their offer.

"With the way the bidding is, you could be putting out a lot of money on home inspections and not getting the house," Matchett-Smith said.

"And I don't think you always have time to arrange it," Goodwin added, noting the average time between showings and offers is about six days and you might be too busy to see a house right away.

Plus, they knew a bid with conditions might be bypassed by homeowners who receive condition-free offers.

When they sold their former homes, each got four offers, none with conditions.

What would they have done if one of the offers had a home inspection attached to it?

"I probably would have went to the next offer, just to know it's sold," Matchett-Smith said.

"Unless it was the best offer, enough to make it worthwhile," Goodwin added.

Knowing the tight market, they relied on their experience, and that of their realtor, to spot any major problems with the homes they looked at.

"(Our agent) said if you were suspicious of something that made you want a home inspection, then get a home inspection, knowing you might not get the house," Goodwin said, adding the home they bought (listing price was $279,000) was the second one they'd bid on.

Trained Eye Home Inspection owner Ari Marantz said about five years ago 60 to 75 per cent of his clients had a home inspection as part of their offer to purchase. Now it's maybe 15 to 20 per cent.

"This is probably the worst year I've seen yet," said Marantz, who's the president of the Manitoba division of the Canadian Association of Property and Home Inspectors. "Luckily, I've been able to diversify."

He's talked to other inspectors across the country, who say Winnipeg is unique.

"There's never been a situation where it's been this bad for this long anywhere else to my knowledge, even in places like Toronto and Vancouver," he said, adding Calgary and Edmonton have had some bad cycles.

"It's hard to blame anyone in particular. It's the overall market."

One new trend is pre-offer inspections, where inspections are done before a buyer puts in an offer.

The risk with that is buyers may not get the house and they're out the $300 to $500 they spend on the inspection.

Marantz had one client who did four inspections. After the second one, Marantz felt bad for him and gave him a price break.

The client took it in stride.

"He said, 'You know, I don't know what I'm doing buying a house. I'm considering this an investment. I'm investing in you, and I'm investing in your information, to buy the house and I really don't care what it costs because houses are expensive. Even if I have to do this 10 times, I know I want to get a house that's not going to be a money pit.' "

Another client is a woman from Toronto who's buying a local house. Because she can't see the homes, she's had inspections done -- four, to date.

But there are problems with pre-offer home inspections. Marantz had three cancelled in one month this spring because the homeowners didn't want to tie up the house for the two-and-a-half to three hours it takes for the inspection.

He believes that's "unethical" because it doesn't allow people to do their due diligence.

"A home inspection is your consumer protection and people are waiving it," he said.

"The first-time home buyers or the inexperienced people that are too busy or professionals that don't know the business end of hammer, those are the types of people that need inspections. They don't even know what to look for. That's the real shame as far as I'm concerned, there's no consumer protection."

Some inspectors offer a walk-through for about $150, but Marantz said he doesn't do that because "it's not proper practice and it's not good value or good service for the purchasers."

Owl Home Inspection owner Roy MacGregor said he hasn't seen much of a decrease in his business. Aside from doing full home inspections ($300 to $380), he also offers an inspection ($120) that only keys on one thing a client is concerned about, such as the foundation that could cost thousands of dollars to repair or replace.

"I do one thing or I do everything," MacGregor said. 'If you try to do everything just on a walk-through, you're not going to have sufficient time and devote enough energy to doing it."

He said home buyers have to look at the cost-benefit of a home inspection.

"Even if there's nothing really major discovered during an inspection, at least you have some kind of peace of mind and you're not always going to be worrying and wondering if there is a larger problem," MacGregor said.

"If there is a larger one, then you're probably going to be declining purchasing the house."

Realty Executives First Choice owner Cliff Palmer said five years ago about 25 per cent of his clients had home inspections attached to their offer. Now it's maybe five per cent.

Experienced realtors can be an extra set of eyes to look at things such as electrical, furnace, windows, moisture signs and horizontal cracks that may indicate a wall is pushing in. If clients have concerns, he encourages them to have a pre-offer inspection done or have an inspector do a walk-through.

WinnipegREALTORS Association president Darlene Clare said there are a number of reasons buyers may choose not to have home inspection, including cost, their experience with owning a home or their familiarity with a neighbourhood.

What's important is having agents make sure buyers know the risks of not doing a home inspection or not having any conditions attached to their offers.

"In Manitoba, the law still is very much buyer beware, and so agents will certainly counsel their people in that regard," said Clare, a broker and manager of Century 21 Bachman Associates.

"But agents will also counsel sellers and say, "If there's some things that you know about this property, let me know so I understand the home that I'm marketing.'

"Certainly, a seller doesn't have to disclose anything that's not visible to the eye."

Manitoba Real Estate Association president David MacKenzie said everybody should be allowed their due diligence when purchasing property.

"You would hope that (a seller) would grant (a home inspection). It's of no cost to them," said MacKenzie, owner of Sigmar Mackenzie Real Estate Service.

"But it's their discretion whether they allow it or not. You could read further into (not allowing an inspection) if you wanted to, but it's not necessarily that they're hiding something."

When it was more common to have home inspections as a condition of an offer, some buyers would walk away from a deal even if nothing was really wrong with a house. That wasted a seller's time, MacKenzie said.

After purchase, buyers always have the option of going to court if they have concerns about problems not being disclosed.

In an attempt to put buyers on equal footing and allow sellers to get as many offers as possible, RE/MAX Performance realtor Jeff Stern recently launched a pre-owned certified homes program. Sellers buy a package that includes a home inspection and one-year warranty from the date of the inspection. The warranty excludes pre-existing conditions.

Goodwin and Matchett-Smith have no regrets about not getting a home inspection.

"I think it's always been buyer beware, even if you're getting a home inspection," Goodwin said. "You're better informed with an inspector, but unless he said this house is going to fall down or has serious, serious problems, you know it's a little bit of a crap shoot and you're going to have to fix something."

Republished from the Winnipeg Free Press print edition May 25, 2008 $sourceSection$sourcePage

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