Right now the Toronto and GTA real estate markets are hot, and the effect that this has on the atmosphere for buyers is apparent. Often buyers are unavoidably participating in bidding wars against many other buyers for one property, and houses are selling for over the asking price with no conditions.
Unfortunately, this type of a market creates a risky environment for prospective buyers, since they begin to curtail their rights and remedies in a real estate transaction in order to put forward a more appealing offer to the seller and hope to clinch the deal over the competition.
Often times one of the first protections that buyers give up in this type of market is the right to get a home inspection done. This is a very important right in the buying process and here are some reasons you should think twice before waiving this right in the purchase and sale agreement:
1) HOME INSPECTORS ARE TRAINED TO FIND VISIBLE DEFECTS SUCH AS MOLD OR WATER DAMAGE THAT THE AVERAGE PERSON MAY NOT SEE
While home inspections are not a 100% fool-proof way to ensure the home you are purchasing is free from defects, home inspectors are qualified and trained to look for visible signs of problems such as water or moisture damage, structural issues, and other potentially serious and costly issues that an average person may not see. Home inspectors cannot protect you from issues that are not visible on a cursory home inspection by a qualified inspector.
2) HOME INSPECTORS ARE ABOUT TO BE REGULATED AND REQUIRED TO BE INSURED
While there have been recommended practice standards in place for home inspectors since the mid 1990’s, the Ontario government is now recognizing that home inspection is a serious business. Home inspector qualifications are becoming more stringent, as the industry is moving towards regulations, and home inspectors will soon be required to be insured. Click here to see the recommendations for home inspector regulations in a Panel Report to the Ontario Government. This is important for purchasers, because if a home inspector misses a costly visible defect during the course of a home inspection, the buyer may have recourse not only against the seller but also against the home inspector (who will have a policy of insurance which can respond to the claim). When you waive an inspection, you are also waiving this avenue of recourse. Be sure to read the contract with the Home Inspector carefully to ensure you do not sign away your rights to a claim.
3) A HOT REAL ESTATE MARKET IS A PRIME ENVIRONMENT FOR THE SALE OF HOMES WITH MAJOR DEFECTS
A seller’s market like the current market in Toronto and the GTA is an ideal market for sellers to cash in on homes that have major defects such as water damage, mold damage, or structural issues because the chances are greater that they will find a purchaser who may not notice the issues and will waive their right to an inspection. For this reason, it is more important in this environment to obtain the professional help of a well qualified home inspector. You should also ask for a “Seller Property Information Statement”, though many sellers may be reluctant to provide one on the advice of their agent.
4) WHEN PURCHASING A HOME ALWAYS REMEMBER “BUYER BEWARE”
The general principle when purchasing a home that applies to a purchaser is “Buyer beware”. This means that if there are visible issues that would be obvious to a reasonable purchaser, it becomes very difficult to seek compensation or other remedies for such issues against a seller, whether you noticed the issue or not.
5) A HOT MARKET IS A FLIPPING MARKET WHICH MEANS EVEN SELLERS MAY NOT KNOW ABOUT THE HOME
Even if the purchaser can make the case that the seller should have disclosed the issue or that it wasn’t visible, because of the frequent turnover in hot markets, some sellers may not even know that they purchased a home with defects. They may have had the house for a short period of time, as such, it would be difficult to make a claim against a seller for an issue that they themselves did not know about.
THE BOTTOM LINE
Think twice before waiving your rights as a buyer in a real estate transaction, particularly your right to have the home professionally inspected. Your dream home may not be worth the potential headaches that could be avoided by hiring a well qualified and insured home inspector. If you’re a home buyer looking for more real estate legal advice, or you’ve recently purchased a home and are now dealing with real estate legal issues, contact us today.
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