Ontario’s red-hot housing market is preventing the majority of buyers from getting pre-purchase home inspections done -- resulting in a dwindling number of home inspectors.
It could also result in a buzz kill for new homeowners when they have to dish out thousands of dollars long after the dotted line is signed.
In today’s seller’s market -- one characterized by extremely tight supply, perpetual bidding wars, and sky-high prices that have left few corners of the province untouched -- most homes for sale are now unconditional, so the sale is not subject to financing, an appraisal, or even a home inspection. This marks a dramatic departure from times past, when a booming market meant more work for home inspectors.
"While the data has not been tracked, rhetorically we can estimate that only 15% of homes sold in Ontario are currently subject to a home inspection condition," says Leigh Gate, president of the Ontario Association of Home Inspectors. "Until late 2020, that number was likely closer to 85%."
Dropping Home Inspection Condition Now the Norm
Foregoing a thorough inspection before making an offer can make it more appealing to the seller and, frankly, may be your only chance at buying a home in today's dramatic market. So, many of Ontario's homeowners now settle without one -- whether they like it or not.
The ramifications of this are two-fold, says Gate. "First, homebuyers are not able to complete the due diligence on what is arguably the largest purchase they will make in life," says Gate. "Second, because the cost of housing has increased dramatically, and the current selling procedure includes 'blind bidding,' homebuyers are forced to buy at the top of their financial reach -- often leaving no budget for needed repairs that may be discovered in a professional inspection."
At Carson Dunlop, one of the longest-standing home inspection companies in Canada, home inspectors have discovered chronic wet basements, mould in attics, structural problems, and unsafe wiring in properties of those who initially chose to waive an inspection (or proper research), says Alan Carson, president of Carson Dunlop.
“We have noticed that home buyers are foregoing the home inspection condition during the offer process,” confirms realtor Zain Jafrey, who specializes in the Durham Region. “In a fast paced real estate market with low inventory those offers with close to, or no conditions are the ones that will be accepted.”
Buyers Can Still Do Their Due Diligence
That doesn’t mean that today’s homebuyers aren’t well-researched or walking blindly into the biggest purchase of their lives (well, not all of them, at least). “Forgoing the home inspection condition isn't necessarily the same as forgoing an inspection,” says Jafrey. “Many homebuyers are looking more thoroughly at properties during showing periods, or getting pre-inspections done prior to submitting an offer if they are serious about the home.”
Home inspection/Shutterstock
In the absence of a formal home inspection, sellers often offer homebuyers a pre-inspection report. So, they're not totally in the dark about their purchase. This benefits sellers too, highlights Carson. He says that what many sellers don’t realize is that offering a pre-listing inspection report actually attracts more confident buyers, while also reducing their liability for undisclosed issues that are discovered post-purchase that can costs thousands in post-sale litigation and negotiation.
Now more than ever, however, many homebuyers apparently have few qualms about postponing the home inspection until after the deal is sealed, according to Jafrey.
“Many homebuyers are also getting inspections done after closing for their own knowledge, and understand the risks associated with not getting one prior,” says Jafrey. “Most homebuyers that were guided through the process correctly do not seem to regret it in retrospect because they walk into equity at the time of closing, and did a thorough search of the home prior to submitting an offer.”
To avoid unnecessarily surprises and costs down the road, Jafrey recommends that homebuyers thoroughly inspect the property during their showing time, and to even view the property once again before submitting an offer if possible.
“If there is a home that you absolutely love, try to have an inspection done prior to submitting an offer to see if there are any major things that need to be addressed, and whether they are within your budget to rectify,” says Jafrey.
If a professional home inspection is out of the question, Jafrey recommends that buyers and their realtors ask the listing agent about the age of the roof, windows, doors, furnace, A/C, hot water tank, and sump pump, and if waterproofing has been done prior to submitting an offer. “Although this is not the same as doing a home inspection it does give more information about the property, and can help budget for things that may require attention after closing,” says Jafrey.
It's a Tough Time to be a Home Inspector
Naturally, fewer home inspections means less work is available for Ontario's home inspectors.
"Again, the data is not tracked provincially as we are not provincially regulated, however; it has been estimated that more than one-third of all Ontario home inspectors have left the profession due to low business volume coupled with dramatically increased operating costs," says Gate. "Professional liability insurance for inspectors has risen significantly in the past two years, driving many to early retirement or alternative work opportunities."
Gate points to longer-term impacts of this exodus. "When the market balances out, we will have a shortage of professional home inspectors to meet consumer demand, and lenders may develop concerns over higher leveraged properties when significant repair costs are identified after the transaction is completed," he says.
The good news, however, is that mandatory home inspections have been included in talks and proposals on how to make Canada's housing market more affordable. Back in August, Prime Minister Trudeau proposed a Home Buyers' Bill of Rights, to add more transparency to the home buying process, which would include the right to a legal home inspection. Now, it's probably time for action on that front.
