Managing Risk in a Red-hot Real Estate Market

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Did you miss out on a home inspection when you bought your home?

With the real estate market in the lower mainland on a steady rise with too little inventory and excess demand, it is no secret that homebuyers are facing the domino effect of challenges.  The “dance” unfortunately includes skyrocketing prices, tight closing dates, and bidding wars.

Under normal market conditions, homebuyers submit an offer and make a decision to buy the home, subject to a home inspection. The homebuyer has more control over the buying process. They are clear on their perceived value of the home & the investment that they are about to make based on the condition of the home. They can also identify, should they proceed with the purchase, what needs to be done following the transaction.

However, under the current extra-ordinary conditions of the market, homebuyers have been forced to change the way they do their due diligence as a consumer.  Many buyers are arranging home inspections before they even submit offers for sale, while others are choosing to do inspections after the home has been purchased.

In cases where inspections are arranged prior to making an offer, ideally the inspection goes well, they submit a clean offer and get the deal done. Now they can start on a budget and prioritize the “fix it” list before moving in.

However, this gamble is more often met with frustration, because buyers need to move and buy another home quickly. In addition, they have been put in a position to compete for a new home only to get outbid by a higher offer. The cycle can go on and on.

Anticipating the repetition of these experiences on subsequent properties, buyers will need to set aside more funds for inspection services.

Even more concerning are scenarios where accepted offers have unrealistically short time frames or are subject to “no inspection”, putting buyers in a vulnerable, risky position.

 

What if you find yourself unable to have a home inspection done prior to closing?

Until the conditions that are creating this market change, this is the inevitable reality.  So what is a homebuyer to do?  What if you find yourself unable to have a home inspection done prior to closing?  Is it worthwhile to get an inspection post-purchase?

Absolutely. All homes need repairs and maintenance. It is better late than never.

Should you wait a few months, or get it done sooner?  I recommend having it done as soon as the current homeowners move out. This way, all of the storage and furniture will be out of the way and the home will be easy to view, with few limitations (areas that cannot be seen due to carpeting, furniture, appliances, wall hangings, etc)

Further, it makes sense to know what repairs are necessary before you move all of your furniture and belongings into the home, especially if you plan to renovate. Your inspector will be able to give you a report, detailing what needs to be repaired, and ideally, list the priorities.

If you missed out on an inspection and have already taken possession, then it would be wise to arrange a maintenance inspection. Again, this should be done as soon as possible.

 

New Home Purchases:

Should you get a brand new home inspected? If so when?

With newly built homes, there is usually a warrantee program provided by the builder. Often, home buyers will wait until just before their first year expires before they go ahead with the home inspection. After the inspection, they can go back to the builder and have the deficiencies fixed.

Yes, it is wise to have a new home inspected. However, I believe it is best to arrange the inspection when or shortly after you take possession, in case there are any conflicts, which need to be resolved between you and the builder (this happens quite often, unfortunately).

 

Buying and older home?

If the home is older, (before the 1980’s) your risk factor can be significant… Any safety or environmental issues like faulty wiring; structural flaws, asbestos or mold can be dealt with before you move in. Expensive environmental concerns, such a leaky oil tank will need to be addressed as soon as possible, along with a sizable budget.

As with all inspections, see if you can get your hands on permits, paperwork and receipts for new boilers, furnaces, water heaters, roof replacement, renovations, testing for asbestos documents and a scan for a hidden oil tank, if possible.

At the end of the day, regardless of market conditions and risk factors all homes will need to be inspected whether they brand new, old or in between.

For more information on this topic, or anything mold related feel free to contact me at 604-729-4261 or sean@homeinspectorsean.com and I’ll help you out.