If you’re a first-time home-buyer in the Greater Toronto Area, it might come as a surprise to you to learn that home inspections are not like what you see in real estate television shows on HGTV, Slice, or Bravo.
Television viewers are regularly led to believe that there’s a “pass” or a “fail,” but in reality, that’s just something that’s written into the script for dramatic purposes.
While there are jurisdictions around the world that have a pass/fail system, that doesn’t exist in the Province of Ontario, where home inspectors are regulated by the Ontario Association of Home Inspectors (OAHI), which is a self-regulating organization.
Looking for more hard-hitting real estate advice? Listen to our podcast, The Last Honest Realtor, on our website or anywhere else you get your podcasts.
How Does a Home Inspection Work?
Since home inspectors don’t issue a “pass” or a “fail” here in Ontario, a homebuyer might be wondering, “What do they say?” Or more importantly, “How does a home inspection work?”
A home inspector will typically spend a couple of hours inspecting the home on his or her own, before walking the purchasers through the home to explain his or her findings. These findings are typically detailed in a written report that’s provided to the purchasers shortly thereafter.
Who pays for home inspections, and how much do they cost? Find out in our blog: How Much Does a Home Inspection Cost
There’s No True “Pass” or “Fail” but There are Dealbreakers
What can “pass” or “fail” an inspection is completely subjective.
The home inspector will likely never say “You shouldn’t buy this home” or rather “You should,” since the home inspector’s job is to educate and inform the purchasers on every aspect of the home, both good and bad.
When educating our own clients, we typically tell them that there are no “deal-breakers” in an inspection, but rather what we would call “red flags.” Most of these are building materials that aren’t used anymore, but present concerns in today’s day and age. Notably:
Knob-and-tube wiring, aluminum wiring, asbestos, vermiculite, UFFI, clay pipes, and lead pipes.
Do you have more questions about buying a home in Toronto? Here are some more posts you might find helpful:
- What Sellers and Buyers Need to Know About Real Estate Fees in Toronto
- Fixed Rate Vs. Variable Rate: A Guide for Home Buyers
- How Much Does it Cost to Own a Home in Toronto?
But Even That’s Subjective
One of these items on its own isn’t necessarily a reason to back out of a conditional purchase of a home, but rather it’s up to the purchaser to identify the cost associated with remediation, as well as the risk involved.
For example, an inspection might reveal that a house has been completely re-wired except for one light switch in the front hall which was missed during the rewiring process, and contains the dreaded knob-and-tube. This might cost $200 to re-wire, or maybe upwards of $1,000 if an electrician needs to make holes in the walls, which would need to be re-drywalled and painted.
On its own, this isn’t really a reason to avoid purchasing a home, right?
But what if the entire house was found to contain knob-and-tube wiring? Depending on the size of the house, and how many repairs would need to be done to the walls after re-wiring, this could cost a home owner tens of thousands of dollars.
If this wasn’t known before the purchasers made an offer that was conditional on a satisfactory inspection, then the shock and surprise might make them want to back out, not to mention the risk, and the cost!
Learn more about the ins and outs of buying a home in Toronto with these posts next:
- Are Interest Rates Actually Important When Buying a House?
- Should You Compromise When Buying a Home?
- What are the Elements of a Real Estate Purchase Agreement?
It All Comes Down to You
Every buyer is different, as are their expectations and risk tolerances.
Having said that, no home is perfect, which is why it’s important for buyers to educate themselves about the realities of home ownership, maintenance, and housing styles in the areas that interest them.
In central Toronto, many homes date back to the late 1800’s. As a result, home buyers have to reign in their expectations and realize that it’s difficult to compare the inspection of a Victorian-era home built in 1886 to the sub-division home in Richmond Hill that they grew up in.
Looking for “red flags” in a home inspection is an integral part of the process, and if enough red flags were found, they could collectively represent a “deal breaker.”
When educating our own clients, we encourage them to consider the following when looking at any red flag found in a home, and the process of remediation:
- Cost
- Inconvenience
- Risk
If a buyer is purchasing a $2,000,000 home and there’s a plumbing issue that could run them $500, it’s not an exorbitant cost, nor is the inconvenience likely that high, and it would seem that there’s very little risk.
Speaking of risk tolerance, what happens if you buy a home and regret your purchase?
But on the flip side, if a first-time buyer on a strained budget, buying a $900,000 Toronto home, conducts a home inspection and finds that the attic is filled with mold, then the above three items might add up.
Mold remediation could cost $10,000, and perhaps all the attic insulation would need to be replaced, and this would add to the cost. The buyers would have to wait until after the purchase has closed to get the work done, and it could take weeks. What if this meant they needed to stay in a short-term rental for the time being? Suddenly, these costs could add up. Not only that, but they might also be concerned about the air quality in the home, and suddenly the risk profile of the house might not be worthwhile.
The very same situation might have a different result for a different buyer, however. Every buyer is different and has a different risk tolerance, budget, and wherewithal to work on a home.
How to Handle Red Flags when Buying a Home
Our list of “red flags” presents a starting point for any home inspection, and typically this is where the greatest concern lays. However, it’s important to understand the type, age, and condition of the other major components in the home.
Example 1: The Roof
Is it a flat-roof or sloped? Is it asphalt shingles or modified bitumen? How old is the roof? What condition is it in?
One house might have a sloped roof with brand-new asphalt shingles, installed by a reputable company who provided a twenty-year warranty. But the next house might have a flat-roof with inadequate drainage and water pooling in multiple areas, with cracks forming in the modified bitumen, and no record of maintenance.
The roof at the first house provides the buyer with peace of mind, and let’s them know that while they don’t need to spend money on the roof today, they also might not need to spend money over the next 5-10 years on it.
The roof at the second house provides a giant question mark and would require the buyer to do further analysis on the scope of work, potential cost, and associated risk. Pooling water could lead to leakage in the attic or second floor, and remediation might require new eavestroughs and downspouts.
An educated buyer is an empowered buyer. Read these posts next to learn about buying a home in Toronto:
- Should You Buy a “Tear Down” Home in the City of Toronto?
- Should You Buy a House with a Pool
- Do You Really Need a Buyer’s Agent?
Example 2: Plumbing & HVAC
In addition to the roof, other major components of the home are windows, doors, heating, cooling, plumbing, and electrical.
The existence of a thirty-five year old air conditioner would not “fail” a home inspection, but rather the inspector would note that it’s a high probability the home buyer will need to replace the unit in the immediate future. If the approximate cost of doing so were $5,000, the home buyer would need to budget accordingly.
On their own, small issues with these major components of the home might not “fail” an inspection, but as with the “red flags” we spoke of earlier, the issues could add up to one giant deal breaker.
Let’s say that a house, which presents beautifully in photos and in person, is revealed to have a 35-year-old air conditioner, a 28-year-old furnace which is too small for the home, a hot water tank that is rented at $175 per month (also something we see noted in inspections!), an electrical panel that is only 60-amps and insufficient for the house, and all the windows were original to the home, which was built in 1908.
Suffice it to say, the cost to remedy all of these issues could be substantial, and while one of these issues on their own could be reasonable task for the purchaser, the collective work involved might be enough to give them second thoughts about the purchase.
Take a deep dive into the process of buying a home by downloading our exclusive Buyer’s Guide today.
My Advice
As somebody with over two decades of experience in the real estate industry, who has owned multiple properties, I have a tough-love saying that I always use when I walk through a home with clients for the first time:
“On a long enough time horizon, you are going to have an issue in this home.”
But why would the expectation be any different?
Think about cars. Short-term, they need oil changes or replacement wiper blades. Medium-term, they need new brake pads. And long-term, they need substantial work that might not make them worth repairing at all.
We try to prepare our home-buying clients to have realistic expectations about the components in any home, and as a result, be realistic about what is right or wrong when doing an inspection of a potential home.
In the end, the only person who can identify, with absolute certainty, whether a home “passes” or “fails” an inspection is the individual buyer…
Thinking about buying a home in Toronto? We’re always happy to chat! Get the conversation started today by filling out the form on this page, calling us at 416.642.2660, or emailing us at admin@torontorealtygroup.com.
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