Rising prices and dwindling housing stock have would-be homebuyers worked up into a frenzy in some cities in Canada. The fear of missing out (FOMO) is driving people to make decisions that are not prudent, like forgoing a property inspection in hopes that it will help clear their path to purchase over other buyers.
“A property inspection is not a barrier to your ability to purchase a home, as it is sometimes viewed in hot housing markets. Rather, it is a chance for you to enter into what is probably the biggest purchase of your life with your eyes wide open. You need the facts to be able to anticipate what expenses might be waiting for you after you sign for your home,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
Are you already at the top of your budget?
“One issue is that in hot markets buyers are usually entering into home ownership at the top end of their budgets. What would happen if you were faced with hefty mortgage payments and a major home maintenance bill that you hadn’t budgeted for? Would you even be able to stay afloat. Would you have to sell at a significant loss- or even lose the home altogether?,” says Schwartz.
New home? You still need an inspection
There is a common belief that newer homes don’t need a property inspection simply because the home is brand new. However you still need an inspection on a new home, but it’s best to do it a year later when all of the foundation has set. For many homeowners who do a home inspection on a new home, they end up surprised at what their home inspector finds on a brand new home! What you can expect from a property inspection
Getting a thorough property inspection isn’t just about peace of mind; it can be a critical part when going through the bidding process.
For one thing, in most cases, an unsatisfactory property inspection gives you an immediate out of your contract. You may uncover items that you can’t afford to fix- or items which may affect the overall health of your family (e.g. mould).
It also gives you some bargaining power. Depending on the nature of the market, you may be able to amend your offer for a lower price if you uncover some flaws in your inspection or insist that the seller fix them in a new agreement. Either way, you are limiting your own financial obligation.
In this era of do it yourself (DIY), lots of home handymen are trying to save some money by taking on home maintenance tasks. In some cases, this DIY work (think plumbing and electrical) is done by unlicensed people, which means that you might be at greater risk for fire and flooding. Your property inspection may reveal that.
Help you set a real budget
Not only will a property inspection help you determine if immediate repair costs are worth your while if you are going to buy, it will help you ballpark your budget for the future. Housing components all have limited life span. Your inspector will help you consider what your replacement timeline would be (think major components like furnace, roof and plumbing) and when you might have to expect to pay. You can use that information to set up a savings plan to cover those future costs, reducing your debt vulnerability.