Pete McMartin
Sun
Last week, I wrote about realtor Erica Leyland, who complained that in today’s real estate market, where properties are attracting multiple offers, some home buyers were being asked by realtors to remove subjects from their bids.
Usually, Leyland said, it was the “cleanest” bid — one without any subjects — that had the best chance of being accepted.
Often, she said, that meant buyers were being pressured by some realtors to make a bid without a prior home inspection. That, she said, posed two problems:
One, it was unethical.
Two, even if buyers could get an inspection prior to closing a deal, it was still a crapshoot for the buyer to find a reputable, competent inspector. In B.C., home inspectors are not licensed.
I got about three dozen e-mails in response to that column, and most reiterated what Leyland had to say. Most dealt with home inspections, and several — from realtors — cited questionable practices within the real estate industry.
Several stories from home buyers first:
– From Susan Sorich, who sold her older North Burnaby home in June, and during the inspection prior to sale, the inspector found outdated knob-and-tube wiring. Such homes can be hard to reinsure, a fact, Sorich said, that neither her real estate agent nor the inspector seemed to be aware of. Sorich had to get the home rewired.
After selling, Sorich bought on Vancouver‘s west side. She had an inspector come in and he reported he had found aluminum wiring. Again, Sorich said, the inspector and her realtor seemed not to know that it can be hard to get insurance for houses wired with aluminum. So she went ahead with the deal and bought the house. When she tried to insure it, the insurance company told her that before insurance would be offered, she would first have to bring in an electrician to confirm the aluminum wiring posed no safety hazard. Sorich did this. The electrician looked at the wiring and pronounced:
The wiring wasn’t aluminum, despite what the inspector had told her, and the house had been insurable all along.
– From “jp” who wrote that he and his wife made offers on two houses and twice offered more the sellers’ asking price. The offers were accepted and inspections were done both times. Both times, inspectors found knob-and-tube wiring or cracked foundations or insufficient supporting beams, etc., etc.
“In each of these cases we rejected the house, and the seller simply sold the house to the next highest bidder who had no condition on their offer.”
The moral of this story: Home buyers have the responsibility to do due diligence.
– From Wally and Joanne Goss who, even after doing due diligence, walked into a mess. They made an offer on a rental property subject to inspection. The inspection was done; they “felt confident in pursuing the offer” because of the inspector’s report. They closed the deal. Then, while doing a little maintenance on the rental property, they noticed the roof was leaking. They brought in a roofer: the roofer advised them to replace the entire roof which, he told them, had many problem areas. His estimate: $12,000. The Gosses brought in five more roofing companies for estimates. They all said the same thing.
“The report (by the inspector),” the Goss’ wrote in their e-mail, “stated the roof was 4-5 yrs old and intact and functional.”
They brought in a second independent roof inspector whose report, they wrote, “pointed out many deficiencies of the roof and the initial inspection was poor to the point of being negligent.”
– From Ken Davies, an operations manager for a Vancouver strata-title highrise, who wanted to give me an “insider’s perspective” on home inspectors who regularly inspect the building’s power plants and mechanical rooms for their clients.
“My observations? In all cases their eyes sort of glaze over, they do not know or even slightly comprehend the equipment they are looking at, they ask . . . ridiculous questions.”
For example, he said, they were unaware that steam was piped into the building, not created by an on-site boiler, and what they thought was a boiler they were looking at was actually a storage tank.
“My point? A trained expert would be able to evaluate the mechanical room in a few minutes as to its mode of operation by looking!”
Ken’s opinion?
“The buyers’ money is wasted on these inspectors.”
Even those in the home-inspection industry recognize the problem. Doug Brown, of Brown & Associates Building Inspection Services Inc., writes:
“You seem to have hit the nail on the head . . . . We in the home-inspection industry have been trying for years to have the government support or require some kind of certification process for the home-inspection industry. At present, anyone can hang out a shingle and say they are a home inspector and the home buyer is the victim.
“On the local front, we are trying to . . . have the B.C. government put legislation in place that would require anyone doing a fee paid home inspection be licensed.”
Several realtors also took their industry to task. Ken Newington, a Squamish realtor, agreed with Leyland‘s complaint, and wrote about the disturbing growth of “part-time” realtors who, in doing real estate on the side, might have a flimsy grasp of rules and ethics.
“Even though I am a ‘free enterpriser’ at heart, I see the need for more regulation in this industry. I was disappointed when the rules were relaxed a few years ago to, once again, allow ‘part-timers’ to work as realtors.
“It has reached the point now where anyone (without a criminal record) can take the pre-licensing course and, once they have passed it, there are agencies who will ‘hang’ the new realtor’s licence as long as they pay the desk fee and go to the post-licensing course. In some cases these new agents seem to work without further training or supervision.”
Albert Teichner, a retired realtor with 35 years of service and a real estate trainer, wrote:
“The saleslady (Erica Leyland) was 100 per cent correct. It is a breach of a realtor’s fiduciary duties of CARE and LOYALTY not to urge a buyer to have the property inspected by a licensed inspector PRIOR to entering into a firm, subject-free contract.
“In the case you have described, ALL realtors who have omitted the ‘inspection clause’ are in breach of their fiduciary duties.
“Organized real estate (in the form of the various real estate boards) . . . all know what is going on and are doing nothing about it. The public is not aware of this situation; the sellers are in seventh heaven and often get more than their outrageous asking price, the buyers are panicking that they will loose (sic) out on a low-interest mortgage.”
Finally, in the interest of balance, I include one correspondent who disagreed with Leyland and my suggestion that home inspections prior to sale be legislated. Wrote Lambert Low:
“Sorry, but if there are people out there who want to make the biggest purchase of their lives based on faith, then who is Erica, you, or me to question that? Wouldn’t that be like questioning their religion? Like I said, you can’t legislate for IDIOTS!”
© The Vancouver Sun 2005