Our first line of defence in avoiding a bad property investment is the home inspection report. To get the most out of this report you need to do two things: Be present and ask questions.
While a recent announcement by the Ontario Minister of Government and Consumer Services will see the introduction of laws to establish minimum standards for home inspections, this doesn’t mean a homebuyer can neglect their own due diligence. This new legislation proposes to set minimum licensing standards for the roughly 1,500 home inspectors that work in Ontario, and will include a regulations on what information needs to be disclosed to home buyers, as well as regulate the language inspectors can use in their contracts.
But even homebuyers in provinces without inspector regulation can be proactive about avoiding the money-pit nightmare.
Be present during the home inspection
The most important rule is to be present during the home inspection. This means scheduling time off from work and family responsibilities, and shutting off the phone, during the couple of hours the inspector is present at the home you hope to buy. It’s not enough to be physically present, you also need to be engaged in the process. This allows you to observe and, when necessary, ask questions.
6 questions to ask during the home inspection
Want to get the most out of your home inspection? Start by asking questions. If you’re not sure where to start, consider this list of possible inquiries:
Question No.1: How do I pick a home inspector?
In this highly competitive real estate market, most buyers simply call up a few home inspectors and ask how much they charge and when they are available to do an inspection. “That should be the last question,” says Peter Christopher of Connecticut-based Fairfield Home Inspections. Instead, ask the inspector what qualifies him or her? In other words, what makes him or her suitable for the task? These initial questions can include: How long have you been inspecting homes? Are you a full-time or a part-time inspector? Where did you get your training? How many homes do you inspect a year? And, are you experienced with this type of home?
Remember, you want an inspector that does the job full-time. Often, part-time inspectors are real estate professionals, such as home renovators, with knowledge of housing issues, but not necessarily the experience to identify problems.
Question No.2: What problems should raise flags?
There are a number of issues that should raise a flag for homeowners. One is asbestos. But that doesn’t mean that you should run for the hills if you hear the “a” word. Instead, ask questions: “Does the asbestos need to be removed immediately to prevent harm?” and “Is it a problem if I leave it untouched?” are two questions you need answers to. Quite often, old pipes will be wrapped with asbestos; while this will mean remediation, at some point, it may not be an immediate issue. Rather than run for the hills, you could use this as a negotiation tactic: Asking the sellers to reduce the price to account for the cost of remediation.
Another issue to pay attention to is mold. Ask your inspector if he or she sees stains or spots on ceilings, in closets and around attic beams. Then ask if remediation is required. Sometimes, the best way to deal with surface mold is to clean it properly and then add a vent—at a much cheaper cost than mold air quality testing and full remediation.
Another costly problem to avoid are hidden in-ground oil tanks. Ask your inspector if there’s any evidence of a former oil tank on the property. Even if the homeowner has evidence of a tank that’s been removed, you’ll need to verify that the soil hasn’t been contaminated. As Peter Christopher of Connecticut-based Fairfield Home Inspections, points out “if a tank has leaked oil into the soil, it can cost you up to $100,000 to deal with the problem.”
Question No.3: Are there risks I should consider when buying a foreclosed home?
When a home is foreclosed it’s usually because the owner fell into hard times; this not only translates into financial trouble, but often a lack of incentive in maintaining the house. As such, make sure you really check and double-check the plumbing—making sure that all pipes are free and clear of obstructions, there are no leaking fixtures, and that older clay pipes are still intact. While a bank won’t fix any damage in a foreclosed home, evidence of damage or needed repairs, as found in a home inspection report, can be used to negotiate a lower sale price. (Keep in mind, however, that some banks will deny requests for home inspections, stating a property is sold “as-is.”)
Question No.4: Are there more issues with older homes?
Older homes typically have more problems, when it comes to a home inspection. For instance, support posts and beams have been subjected to more years of dirt and grime and are often more susceptible to rot, mold and termite (or other vermin) infestation. Older homes may also have exposed or hidden knob-and-tube wiring—older wiring that can be prone to fraying and starting electrical fires. Also, keep an eye out for two-prong or ungrounded outlets, as they are often signals of older, outdated wiring in a home.
The key with inspecting and buying an older home is to gather as much information about the condition and maintenance needs. Use this information, and some general costs, to determine how much will be required to update or remediate the home. Then consider these costs when putting in your offer to purchase.
Question No.5: Are there any concerns when buying a newer home?
Ever heard of a “sick home”? These are the newer homes that are sealed so tightly that air isn’t able to circulate properly, creating a sick environment for both the appliances and the residents. “All newer and R2000 homes need to have a heat recovery system,” explains Rob Parker, a registered home inspector (RHI) with the Ontario Association of Home Inspectors. This system includes an air-exchange unit that allows the air within the home to circulate and reduces the opportunity for mold to grow. “Every house should have five to six complete air exchanges per day to stay healthy,” says Parker. “If it’s a newer home, built with stricter standards, the only way to get this stale air out is to through a filtered exchange.”
Question No.6: What should I pay attention to when it comes to the furnace and A/C?
A good inspector will point out and read the furnace and boiler maintenance sticker. “If it’s had a lot of service calls in a short interval or if the system itself is old and greasy, that’s a bad sign and you should consider a replacement,” says Parker. Also, keep in mind the lifespan of furnaces, water-heaters and air conditioning units. Mid-efficiency and high-efficiency furnaces last about 15 years, while hot water heaters last between eight to 12 years and A/C units last about five to seven years. Look at the sticker and then calculate how long until you have to replace each unit.
Given that you’re about to spend $200 and up on a home inspection, it’s wise to be prepared, to listen and to observe. Do this and you’ll be able to ask the right questions—and get the answers you need to determine if the house you want to buy is a good investment, or a potential money pit.