Home inspectors see what you don't

DATELINE: June 15, 2001
SOURCE: Alan Silverstein - Money Columns

Wise homebuyers will assemble a trio of real estate professionals before embarking on a house-hunting expedition: Real estate agent, home inspector and real estate lawyer. This week Homeward Bound examines home inspectors, their strengths and shortcomings.

Most resale buyers conduct only a brief, cursory inspection of a home, being sold instead on cosmetics. That's too bad, since real estate is governed by the ancient doctrine of caveat emptor, or buyer beware. Sellers need not disclose any defects about a property, unless they constitute a health risk or safety hazard. (Three narrow exceptions are fraud, misrepresentation and mistake).

With few Ontario real estate boards adopting seller disclosure rules, buyers themselves must identify a property's flaws, maintenance deficiencies and structural defects.

To help buyers make an educated decision, the home inspection industry was launched about 27 years ago. Several hundred dollars for an impartial examination is money well spent, compared with the agony and expense of unforeseen repairs, hidden defects and unpleasant surprises.

A recent Ontario case underscored the limitations on home inspections: They are "an opinion of the present condition of the property, based on a visual inspection of the readily accessible features of the building. The inspection is not a guarantee, warranty or an insurance policy." After completing their evaluation of a home, inspectors deliver a written report. Estimated life expectancies should appear for items like the roof, furnace and the driveway. Recommendations for preventative maintenance and cost estimates for repairs are also useful.

Do inspectors want you to tag along on the inspection? Absolutely. Besides enabling them to point out defects and problem areas, it's a great way to familiarize yourself with the house and pose questions while fresh in your mind.

Offer depends on inspection

Few home inspections are conducted before an offer is submitted. Instead, once the right home is found, the offer is made conditional on your obtaining a satisfactory home inspection report within a set number of days. Otherwise, the deal is dead.

Home inspectors operate on short notice (often two to three days). To help them help you, contact an inspector pre-contract. Check on availability, and get price quotes. Learn how extensive a report is provided, and what is excluded. That way, they are poised to move once it's offer-time.

One grave failing of the home inspection industry across Canada today is its unlicensed, ungoverned and unregulated status. No standards or entry criteria means no protection for consumers. Anyone with any qualifications can operate a home inspection business.

It's absurd that everyone involved in the homebuying process is licensed except home inspectors, on whom you'll heavily rely when making a final decision to proceed. Unsuspecting homebuyers can easily fall prey to unscrupulous and fly-by-night operators.

That's why it's crucial to check out the home inspector's credentials as carefully as it will check out the house.

Learn about its background; if it carries negligence insurance; if it belongs to a group pushing for industry-wide standards (the Ontario Association of Home Inspectors or the Provincial Association of Certified Home Inspectors); and if the report cost alone is recoverable if a mistake is made, a weasel way to limit liability.

What about home inspectors and new homes? Like resale buyers, new home buyers focus on cosmetics rather than construction flaws. Few people possess the technical experience to conduct a thorough pre-delivery inspection (PDI). Yet the purpose of a PDI is evidentiary-to establish what damage and deficiencies existed before closing. That's why home inspectors also play a vital role if you're buying from a builder, but one that differs from resale deals. Homes aren't viewed until days before closing, and the whole transaction doesn't hinge on their findings.

Home inspectors who accompany new home buyers on a PDI can assist in spotting defects, oversights, incomplete work and building code violations, and listing them on the Ontario New Home Warranty Program's Certificate of Completion of Possession. A home inspector also helps level the playing field at this critical moment, just before title and money change hands.

Whether a home inspector can join you on the PDI is unclear. Some builders have no objection; others adamantly say no. As builders still own the house, they can veto who attends. Rather than set an industry-wide standard, ONHWP regrettably has left the decision to individual builders. So check the builder's policy in advance. Consider including a clause in the offer, allowing a home inspector to participate on the PDI. If the inspector is barred from the PDI, have it attend within hours of closing, and before moving in. Then file the deficiency list with the builder and ONHWP.


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