Sellers can ignore offers requiring pre-inspection in this superheated housing market
Pete McMartin
Sun
Erica Leyland sells real estate for a living, which, given my last disastrous experience with a real estate salesman, would not have normally predisposed me toward her, except for the fact that she arrived in my office wearing a pink rubberized raincoat and pink rubber boots appliqued with a floral print. She was the colour of Dubble Bubble.
She also happens to be, by all appearances, an ethical realtor — and please, no chortling or spitting up one’s coffee. This is a serious matter.
Leyland approached me after what she saw was becoming — in this insane, overheated real estate market — a disturbing trend.
It was a trend that was costing her sales and putting her clients at risk.
“In this market, where you have five or six buyers putting bids on one house, I’m seeing more and more sellers, or their realtors, demanding that most or all of the conditions in their bids be dropped if they want the buyer’s bid to be considered.”
These could be conditions, she said, like a request for a building inspection prior to sale, or an agreement to provide to the buyer details of current insurance coverage if the house had outdated wiring, or an assurance from the seller that any out-of-commission underground oil tanks will be removed at the seller’s expense.
A client of hers lost a bid recently because she had included one of those conditions — asking the seller to provide details of current insurance. The house was old and had outdated wiring. Leyland did not want to expose her client to the possibility of not getting house insurance because of it.
The home had been put on the market at $429,000.
There were seven bids.
Leyland‘s client offered $450,000.
It wasn’t enough.
“The seller’s realtor came back to us and told me that our bid was the only one with that condition in it, and gave the deal to someone else.”
Well, one could argue, hard cheese. It’s a seller’s market: sellers can dictate the terms. If the buyer doesn’t like it, the buyer can look elsewhere.
But dropping conditions like these, Leyland argues, can put all home buyers at risk, especially first-time home buyers carrying a lot of debt. They can end up with unsafe homes, or saddled with unforeseen expenses they can’t afford. The old admonition of caveat emptor — buyer beware — seems facile in the face of half-million dollar indebtedness. (It’s also why I’ve had a change of heart about the leaky condominium crisis.)
The reality is, there are more safeguards for used car buyers than there are for home buyers.
By law, auto dealers must declare, among other things, whether a used car has had repairs of over $2,000, or whether it was a lease or a rental.
But for a home? For the largest investment most people will ever make in their lives?
Well, by law, a seller, or his or her agent, must disclose a property’s “latent defects” — those which aren’t apparent by ordinary inspection, and which affect the property’s value.
But a seller might not be aware of any latent defects, or might claim not to know of any.
The buyer’s recourse? They can take it to court, usually, which can be costly and time-consuming. And many buyers have no idea they even have that avenue available to them.
Additionally, the B.C. Real Estate Association has a property disclosure statement for use by realtors so that buyers might be made more aware of a property’s condition.
But the disclosure statement isn’t mandatory. And it doesn’t have to be made out in full.
Sometimes, buyers might have recourse to a home inspection prior to sale, but there, again, there are problems.
Home inspection is not a licensed profession. While there are home inspection associations with standardized qualifications, anyone can call themselves a home inspector.
And as Leyland says, in a superheated market like this one, sellers can pick and choose between offers, and can ignore any that require an inspection be made prior to sale.
This — in the modern world of real estate — is insane. A consumer buying a $39 toaster has more protection than a couple mortgaging their lives away for a down-at-the-heels $600,000 two-bedroom bungalow with attractive orange circa-1970s shag carpeting throughout and carpenter ants in the basement.
The world of real estate has been turned on its head.
So, too, then, should be the rules governing it.
We might start by legislating the mandatory inspection of any home being put up for sale, by government-approved licensed home inspectors, before it be allowed to go on the market. This isn’t an infringement on the push-and-pull of a free market. It’s an argument for honesty.
A man’s home is his castle:
It needn’t be his ruin.
It’s safer to buy a toaster than a home
Sellers can ignore offers requiring pre-inspection in this superheated housing market
PETE McMARTIN VANCOUVER SUN
Erica Leyland sells real estate for a living, which, given my last disastrous experience with a real estate salesman, would not have normally predisposed me toward her, except for the fact that she arrived in my office wearing a pink rubberized raincoat and pink rubber boots appliqued with a floral print. She was the colour of Dubble Bubble.
She also happens to be, by all appearances, an ethical realtor — and please, no chortling or spitting up one’s coffee. This is a serious matter.
Leyland approached me after what she saw was becoming — in this insane, overheated real estate market — a disturbing trend.
It was a trend that was costing her sales and putting her clients at risk.
“In this market, where you have five or six buyers putting bids on one house, I’m seeing more and more sellers, or their realtors, demanding that most or all of the conditions in their bids be dropped if they want the buyer’s bid to be considered.”
These could be conditions, she said, like a request for a building inspection prior to sale, or an agreement to provide to the buyer details of current insurance coverage if the house had outdated wiring, or an assurance from the seller that any out-of-commission underground oil tanks will be removed at the seller’s expense.
A client of hers lost a bid recently because she had included one of those conditions — asking the seller to provide details of current insurance. The house was old and had outdated wiring. Leyland did not want to expose her client to the possibility of not getting house insurance because of it.
The home had been put on the market at $429,000.
There were seven bids.
Leyland’s client offered $450,000.
It wasn’t enough.
“The seller’s realtor came back to us and told me that our bid was the only one with that condition in it, and gave the deal to someone else.”
Well, one could argue, hard cheese. It’s a seller’s market: sellers can dictate the terms. If the buyer doesn’t like it, the buyer can look elsewhere.
But dropping conditions like these, Leyland argues, can put all home buyers at risk, especially first-time home buyers carrying a lot of debt. They can end up with unsafe homes, or saddled with unforeseen expenses they can’t afford. The old admonition of caveat emptor — buyer beware — seems facile in the face of halfmillion dollar indebtedness. (It’s also why I’ve had a change of heart about the leaky condominium crisis.)
The reality is, there are more safeguards for used car buyers than there are for home buyers.
By law, auto dealers must declare, among other things, whether a used car has had repairs of over $2,000, or whether it was a lease or a rental.
But for a home? For the largest investment most people will ever make in their lives?
Well, by law, a seller, or his or her agent, must disclose a property’s “latent defects” — those which aren’t apparent by ordinary inspection, and which affect the property’s value.
But a seller might not be aware of any latent defects, or might claim not to know of any.
The buyer’s recourse? They can take it to court, usually, which can be costly and timeconsuming.
And many buyers have no idea they even have that avenue available to them.
Additionally, the B.C. Real Estate Association has a property disclosure statement for use by realtors so that buyers might be made more aware of a property’s condition.
But the disclosure statement isn’t mandatory. And it doesn’t have to be made out in full.
Sometimes, buyers might have recourse to a home inspection prior to sale, but there, again, there are problems.
Home inspection is not a licensed profession. While there are home inspection associations with standardized qualifications, anyone can call themselves a home inspector.
And as Leyland says, in a superheated market like this one, sellers can pick and choose between offers, and can ignore any that require an inspection be made prior to sale.
This — in the modern world of real estate — is insane. A consumer buying a $39 toaster has more protection than a couple mortgaging their lives away for a down-at-the-heels $600,000 twobedroom bungalow with attractive orange circa-1970s shag carpeting throughout and carpenter ants in the basement.
The world of real estate has been turned on its head. So, too, then, should be the rules governing it. We might start by legislating the mandatory inspection of any home being put up for sale, by government-approved licensed home inspectors, before it be allowed to go on the market. This isn’t an infringement on the push-and-pull of a free market. It’s an argument for honesty. A man’s home is his castle: It needn’t be his ruin.
© The Vancouver Sun 2005
