In June I purchased a two-storey house in central Tuxedo built in 1966. The house was an estate sale marketed by a leading realtor in Winnipeg . According to the information and advice from the agents there were multiple bidders and to make the sale conditional on a home inspection report was to lose the bid. I now wish I had. Not only did the house sell above the list price, I paid a hefty cash down payment. There was no disclosure by the vendor or his agent of immediate repairs to be made.
After only 1 month in the house, we have had a miserable experience with one problem after another. There was water and mould in the basement, the foundation is cracked, the air conditioning does not function, a toilet and the main bathroom shower leak and have damaged the main floor ceiling. Now Manitoba Hydro has condemned my furnace as unsafe. The eavestroughs are clogged and improperly installed and the pool equipment was defective. Estimates for all the repair work amounts to well over $20,000, at present.
What can I do about this “white elephant”?
Unfortunately, your situation may be all too common an occurrence over the last few years in Winnipeg , due to a very high demand for homes and limited supply. It certainly outlines the benefits of a pre-purchase home inspection. I will try to offer suggestions for possible solutions to your dilemma, but will mainly dwell on options for other purchasers to avoid the same problems.
The only possible reassurance I can offer you is that after completion of the repairs on your home, the value should increase, substantially. These defects may not have been visible to you but improvements of this nature, if the house was as neglected as it sounds, will be visible to future inspectors and purchasers. You may not be able to recoup all the costs involved immediately, but if the housing market continues in the same upward trend, the appreciated value of your home may offset a large amount of your spending. The downside is that you may have to dip into savings, take out a loan, or increase your mortgage to do the necessary repairs and upgrades.
A similar trend to forgoing conditions on Offers to Purchase during “Seller’s markets” has been seen in other areas across the country. The most similar situation may be in Alberta , where house demands in Calgary had exceeded supply through much of the last several years. Complaints from Calgary home inspectors, used to very steady work, were common. The market is still strong in that area, but inspections have been on the increase for some time. We may be seeing a trend to that same rebound here over the last few months, which is good news.
The reason that the reoccurrence of home inspections as a standard part of an Offer to Purchase is happening, even in hot markets, is the benefits to all involved. Your case outlines the obvious advantages of a thorough home inspection to the purchaser, but the benefits to the other parties are more subtle. To the Agents involved, the benefits of a satisfied client cannot be underestimated. As you stated in your question, there was no disclosure of these problems by the Listing Agent or the Vendor. Legally, the Agent representing you in the transaction, along with the Listing Agent have a duty to disclose any know defects and inquire about these issues. According the Standards of Business Practice of the Canadian Real Estate Association (CREA), “A Realtor has an obligation to discover facts pertaining to every property for which the Realtor accepts an agency which a reasonably prudent Realtor would discover in order to fulfil the obligation to avoid error, misrepresentation or concealment of pertinent facts”.
In many cases, there is not sufficient time or resources for this to be done by the Realtors in a crazy housing market like the one we have experienced recently. Including a home inspection in the buying process, even prior to making an offer, will ensure that these facts or issues with the home will be discovered and disclosed to the purchaser. This will help both the buyer and ensure that the Realtors are able to meet their obligation to their Standards of Practice. I fail to see how anyone benefits, when necessary repairs or defects are not discovered until after possession of a new home. Insisting on Offers to Purchase without any conditions makes this a strong possibility.
The benefits of a home inspection to the seller are the hardest to understand, and are more of a legal issue. The homeowner is legally bound to disclose any know defects with the home they are selling. If they are trying to hide issues, by not allowing the purchaser the right to their due diligence, or proper inspection, they may be setting themselves up for a possible lawsuit, once these defects are discovered. Nobody wants to end up in court over the sale of a house, whether they were at fault or not.
The largest benefit of including a condition for a Pre-purchase home inspection can be summed up in the words of Michael Guihan, President of the Canadian Association of Home & Property Inspectors (CAHPI) on a recent Television show broadcast on Report on Business TV. In response to the question, “why should people get a home inspection”?, he responded “So they know what they are buying”. When everyone involved in the home buying process is aware of all available information about the home, everyone benefits.