Recently I was both charmed and horrified when a pair of my fab newlywed buyers gave me a gift as a ‘One year Anniversary’. As I accepted their delicious sweets and treats (Hello Wine!), they saw a look of confusion pass across my face. I couldn’t compute how they had only recently got married and yet it was already a ‘One Year Anniversary’, until they wryly clarified that the anniversary was “ours”… meaning we had now been looking for the right property for 365 days!
I’m sure I looked a bit like this, though without the Robin’s Egg blue hat:
To elevate my consternation, this joyful exchange occurred moments before we entered a property my Buyers had enthusiastically viewed over the weekend at a Public Open House. They were extremely excited at the prospect of buying it. But there was some concern over the Presale Home Inspection being offered by the Sellers in advance of offers.
In our hot Toronto real estate housing market, it isn’t unusual for the Seller and Listing Broker to make available a Presale Home Inspection in advance of the offer date. The objective is two-fold.
First, it allows the Seller to present a report prepared by an ‘objective’ third party that ‘fully discloses’ the state and condition of the property, including those deficiencies and flaws a Buyer should be aware of in advance of negotiating a purchase. Providing this to a Buyer potentially mitigates any future accusations that the Sellers were intentionally hiding any property defects.
Second, by providing a comprehensive report for all Buyers to review in advance of the offer date, the Sellers are potentially eliminating the need for each Buyer to hire their own inspector (at a cost upwards of $600 a pop) to inspect the property as part of their own due diligence. This approach provides the Buyers some assurance on the condition and repair of the dwelling they are bidding on, while it increases the chances the Sellers will receive a condition-free offer in competition that might otherwise have included a condition on a home inspection. In Toronto, this is a common strategy.
The risk, of course, for both the Seller – and especially the Buyer – is that the Home Inspector isn’t very good and misses some crucial or critical information.
In Ontario, there is no formal government-mandated certification to become a ‘Registered Home Inspector’, though this self-regulating industry is spear-heading its own professional designation and regulations. In the interim, we realtors have to learn which Home Inspectors are reliable and accurate. Over time and through experience we each find our favourites, though this doesn’t mean there are occasions where even the inspectors we recommend make errors. It’s one of the challenges we realtors, like the public, face. It’s one reason why Mike Holmes is so popular, as he pokes his cameras into the real life nightmares we all fear might happen to us.
In the instance of this property, my Buyers had googled the name of the Inspector only to find a post that said something like “This inspector will miss something BIG – and it will cost you BIG time!”. I wasn’t surprised to read these words in their email, as some years earlier this very Inspector had told one client of mine the roof of the house they were purchasing was fine when, in fact, it had to be replaced within months of closing. I’ve been wary of his reports ever since.
Now I’m no inspector and don’t for a moment present myself as one. However, I have repaired and renovated dozens of properties since I bought my first extremely affordable $86,000 crapbox in 1986, been involved from start to finish in the massive retrofit and conversion of several vintage buildings into boutique loft condominiums since 1993, and have witnessed multiple home inspections in the twenty-one years I’ve been selling real estate. So I did what I always do when we enter one of my prospective Buyers’ ‘Dream Homes’. I combed it head to toe looking for issues while comparing it to the Presale Home Inspection Report.
In this particular downtown east-side semi-detached dwelling, at the back of the house was a frame shed addition on a brick foundation that contained the rear staircase. The stairs went from the kitchen down to an at-grade landing where a patio door opened to the garden, and then the stairs reversed down into the finished basement. Here’s a picture, not of the house in question but the kind of rear shed addition I write of:
Another disconcerting feature of the shed addition in question was the lack of access under each set of stairs so one could see what was underneath. I always prefer to visually inspect the underside of an entire dwelling and consider any concealed portion a Red Flag. In this instance, what especially concerned me were the edges of these wood stairs, which showed signs of dampness and dry-rot. Furthermore, the brick foundation wall was parged with concrete over portions of the staircase, and the wood beams on top of the brick foundation that wrapped the exterior perimeter of this shed addition showed active signs of water penetration and deterioration.
This bothered me.
I opened the patio doors and went outside. A built-in outdoor kitchen unit with inoperable sink had been attached to the outside wall of this frame-constructed vinyl-clad shed addition. As a result, there was no way to positively determine whether water was actively getting in behind the built-in and seeping in through the wall cavity, though this was my suspicion. The issue wasn’t just about stopping the water, but recognizing that the perimeter wood beam sitting on top of the brick foundation was, to my consternation, situated below the ground. Having a wood beam abutting soil, especially if wet, creates the ideal opportunity for termite infestation.
Are you aware of the serious termite problem Toronto suffers from?
Termites are Wood Destroying Insects that feed on the cellulose of wood. Thousands of Toronto homes have wood components and, if left unprotected and in proximity to soil, can fall prey to termite infestation. The ideal condition for termites is wood in contact with soil and moisture. This combination is like a banquet feast for them. Once they have access to your residence, they construct and travel through shelter tubes like the ones in the photos below, and seek out other areas of damp wood.
I’m acutely aware of termites. They once caused tens of thousands of dollars in damage to one of my properties. It was a nightmare to reconcile and I don’t wish the experience on anyone. Needless to say, to be standing in a wood frame shed addition where the entire wood beam perimeter was located below ground level and showing signs of moisture served up a BIG red flag. A quick call to Aetna Pest Control at 416-469-4111 confirmed that houses both across the street and a couple of doors north (they do not reveal specific addresses) had been treated for termites. This suggested there was a high risk this property, if not already infested, was a likely candidate for future treatment and repair.
The cost? Basically the entire shed addition would require having the wood beam perimeter removed and a new concrete sill installed at least 8 inches above grade. The exterior built-in outdoor kitchen would need to be removed, the vinyl siding pulled off and restored, the patio doors taken out and replaced (they were approaching the end of their life span), the stair cases removed and rebuilt, and then any additional repairs executed if there were signs of termites. Worst case scenario? $30,000!
Although it did not look like the Sellers had recently repaired this area nor intentionally tried to cover up the issue prior to listing, I was distressed this concern was not mentioned in the report. There were too many clues to miss what could be a massive repair bill. Yikes!
Forty-five minutes later my Buyers and I walked away from the property. Once again I did what I do best…. I talked my Buyers out of buying! Alas, it was a bittersweet moment, but I won’t deny I’m extremely proud of my experience, commitment and integrity to serve my clients’ interests. It’s why I’m a Top Producer. All the same, fingers crossed we won’t be celebrating our Second Year Anniversary looking for a Home!
Here’s more on termites in Basement Blues.
~ Steven and the urbaneer team
Bosley Real Estate Ltd., Brokerage • (416) 322-8000
http://www.urbaneer.com • firstname.lastname@example.org
– earn your trust, then your business –
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