home inspections aren't a waste of money

Why home inspections aren’t a waste of money

RAFFI ANDERIAN

By Mark Weisleder | Fri May 20 2011

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Almost every resale home purchase is conditional on the buyer being satisfied with the results of a home inspection.
But what does satisfied mean? When can a buyer back away and when are they just using the inspection as a convenient way to find a loophole when they get cold feet?
If the buyer decided not to do an inspection and then just cancelled the deal, they would likely lose their deposit and could probably be sued for breach of contract by the seller if they sold to anyone else for less money.
Inspection conditions are not an automatic option to terminate, as many buyers believe. A lot will depend on the exact wording of the condition language. It will help a buyer if it says that the buyer has to be satisfied with the inspection in their “sole and absolute discretion.” The buyer may have difficulties if they use a relative who is not qualified and who just says something like “This is not a good house.” Make sure you use a qualified home inspection firm. Check to make sure that they are registered with the Ontario Association of Home Inspectors.
Usually, a buyer will find an inspector or, if using an agent, the agent may suggest one. The buyer and inspector spend a few hours going through the house and after the tour make a decision about whether to go ahead based on what they’ve seen.
One of the main problems is that inspectors are limited in how much they can investigate. They are not allowed to look behind walls to see if there is evidence of leaks or mould. This is made worse because sellers may not disclose defects in their property, expecting the buyer to be bound by caveat emptor, or buyer beware, meaning too bad if you find out about problems after closing.
Sellers, on the other hand, are not permitted to see the buyer’s home inspection report, unless it says so in the condition. This can be serious for a seller. Let’s say the house sells subject to a home inspection condition. The buyer says “I am not satisfied” and cancels. Now new buyers suspect something must be wrong with the house and the seller has no way of knowing how to explain this.
In order to solve this problem for a seller, I recommend inserting a clause into every home inspection condition that if the buyer is not satisfied for any reason and cancels, they have to provide the seller with a copy of their inspection report within 24 hours. In this way the seller can explain the problem to a future buyer or, better still, just fix it.
Still, in some cases sellers are taking the position that the buyer was not acting in good faith when they cancelled the deal as a result of an unsatisfactory home inspection and are refusing to return the buyer’s deposit. Deposits cannot be returned to a buyer unless both the seller and buyer agree. This can cause a buyer difficulty as they will not have the necessary money to make an offer on another house while they fight over the deposit.
To avoid this, I recommend that buyers make two deposits when they buy their next re-sale home; one small deposit when the offer is accepted, and then a larger deposit once they are satisfied with the results of the home inspection condition. This way, if the buyer is not satisfied and the seller tries to withhold the deposit, you are only fighting over a smaller amount.
If buyers and sellers understand all their rights and obligations under the home inspection condition, there will hopefully be more disclosure of defects up front by the seller, so that the buyer can in good faith conduct a proper home inspection and close.
Mark Weisleder is a lawyer, author and speaker to the real estate industry. Contact him at mark@markweisleder.com
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eye roll

*you’re a lawyer you know full bloody well caveat emptor can be disregarded any number of ways with both patent & latent defects depending on circumstances *

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logginginisdumb](http://www.moneyville.ca/users/logginginisdumb)
May 21, 2011 7:28 PM

don’t bother

*Unless I can get Mike Holmes, next time I’ll ask an insurance adjuster to do the inspection. I had an inspection by a “reputable” company only to have the adjuster pick out several things after I bought the century house that needed imediate attention. ie: wires were run through heat ducts and one worn out wire could have burnt the place down. *

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Coowie](http://www.moneyville.ca/users/Coowie)
May 21, 2011 2:04 PM

bonded

*Home inspectors need to be bonded so that if they miss the obvious some liability for the repairs can be levied back to the inspector *

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Heidi Joe](http://www.moneyville.ca/users/Heidi%20Joe)
May 21, 2011 2:04 PM

If I was a Seller I would offer to pay half of the first Inspection

*To be able to have copies IF? The deal fell through due to the Inspection I would know what problems exist. I would also pick an Inspector with the potential buyer and ONLY use an Inspector that is a member of InterNACHI as on a whole they are the BEST period especially their Code of Ethics. *

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Haywoody](http://www.moneyville.ca/users/Haywoody)
May 21, 2011 12:40 PM

sorry…

*or those NOT wanting to pay half for a home inspection from the “loser” of a bidding war. *

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Jman](http://www.moneyville.ca/users/Jman)
May 21, 2011 10:52 AM

Never use a agent referred by the realtor

*also if they insist that you read the whole report in front of him. Walk away from the house. they do that when they know there is a problem and do not want to disclosed. This is industry that is really full of tricks *

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TangoAlpha](http://www.moneyville.ca/users/TangoAlpha)
May 21, 2011 10:39 AM

or you could get a better Realtor

*a good Realtor will not “recommend” just 1 company. They will suggest 3 different ones and let you, the client choose. Some us want to be able to sleep at night and want to make sure the client isn’t getting a lemon. As far as the article… ALWAYS get a home inspection… even on a condo. Most construction these days is so shoddy it’s amazing… as is the number of people paying 100,000 over list price but not bothering to get an inspection prior to offer night, or paying half for one from one of the “losers” who did their due diligence and had it done. *

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Jman](http://www.moneyville.ca/users/Jman)
May 21, 2011 10:07 AM

Gah?

*Not sure I understand the title of the blog post? Who’s suggesting home inspections are a waste of money? On a more constructive note, I agree with Vonrosenhof - agents want to close, and will recommend home inspectors who will help that to happen. Both agent and inspector win - agent sells, inspector gets more referrals. *

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Greg H](http://www.moneyville.ca/users/Greg%20H)
May 20, 2011 8:46 PM

Do not listen to your agent

*Do not use an inspector recommended by an agent. It is in their interest to see that the deal closes. My experience has been that agent’s will recommend inspectors who are not very thorough and as a result will not go out of their way to find serious problems (after all they want referrals from the agents too!). Their liability is limited so there is little risk to them. We ran into that issue with our last house. We have had nothing but problems which a good and competent home inspector would have uncovered. *

Very nice Roy.
I guess you got the wind back in your sails after the kidney stone decided to vacate the premisses. It did not even pay rent while it was there. Deadbeat.!!!HA HA HA
Nice piece Roy. Its going to be a link in my site.

Very good reading ! Why would NACHI let Mark put a obvious plug to just using a OAHI inspector!On there website!

If these contributing writers knew the whole story behind OAHI I don’t think they would be so quick to point out OAHI as being the up and up body it likes to portray itself as.

Voice of the home inspection industry my arse!

Terry Carson the defacto zealot and person in charge of OAHI will use any method in his arsenal of tricks to remove anyone who dare questions his authority. The problem is people smarter than him are to stupid to question his authority.

His dirty tricks call into question his conduct which is unbecoming.