Welcome to this month’s installment of Dear Urbaneer, where our clients put us to task with tough real estate questions. This time around, our clients are wondering about the extent and necessity of a home inspection when purchasing a dwelling in the original City of Toronto.
We've been looking at properties for a while now. Sometimes the listing realtor has a home inspection available for review and sometimes they do not. Although we can see the merits in seeing what the general condition of a property is like, if the house is renovated do we really need one? Is there much merit in one? What exactly gets examined in a property inspection? And is it worth it and necessary?
Eager to Buy
Here's my reply:
While it can be tempting to forgo a property inspection in competition (or in any market conditions, really) unless you're really well-versed in structural engineering, property construction, and building components - or you've reconciled the property is really worth just land value - I caution you on forgoing this. For example, I was recently showing a grand Victorian on Markham Street owned by a hoarder who hadn't made much effort to keep the house to a good standard for decades (think Grey Gardens), and when my Buyer's friend suggested a home inspection be completed prior to purchase even the Buyer replied it wasn't worth it. "This house is shot" was my Buyer's reply. And he was right. It needed everything including structural work, such that the renovation cost would be, by my estimate, in excess of $1,200,000. Listed at $1,749,000, it sold for a whopping $2.5mil 'as-is'. So while there may be times when a home inspection isn't necessary - because the property is really 'land value' or you're an experienced Buyer in the housing industry - I would otherwise caution forgoing one.
While a home inspection doesn't cover every potential deficiency in a property (more to come on that in a bit), it does offer an overview of the structure and major building components that provides a snapshot of the condition of the dwelling in that moment of time. Many realtors in the city of Toronto prepare one as part of their listing service (here's what the Urbaneer team and I do for clients listing their properties - along with our tips for Sellers - in How To Prepare Your Home For Sale) and make it available to potential Buyers in advance of their submitting an offer. I'm a fan of them as it provides an unbiased third party opinion of the dwelling, reduces the Sellers' liability while providing a Buyer with a summary of deficiencies in advance of their submitting a bid, allows me to price the property taking into account the issues or allows the Seller the opportunity to repair them and include the receipts with the report to demonstrate their good intentions and pride of ownership. Why not all realtors offer one surprises me, given they're a very helpful tool in the sale of bricks and mortar.
Completing a property inspection as part of your due diligence comes down to safety and protection - both financially and physically. A property inspection may reveal illegal or unsafe construction that could put you and your family in danger while living in your home. Similarly without a property inspection, you could be on the hook for substantial repairs, or even liability costs, depending on what the issue is. Illegal or unpermitted work in a home, for example could represent a fire hazard. You could be looking at facing considerable increases in insurance premiums, repair costs, or living within a dangerous situation.
But first, I want to share with you one of my blogs which I send to all my clients looking for a house, so they fundamentally Understand The Six Essential Layers Of Property. These six layers—Site, Structure, Skin, Services, Space Plan, and Stuff (the furnishings) - breakdown the factors by which you should assess a property. Yes, we all love and can become seduced by a home's decor when looking for a property to buy (though be wary of Home Staging which can mask defects as I wrote in Why Is Home Staging Important When Selling Real Estate?), but what's most critical are the more practical details of a dwelling like what is it built of (brick, wood, plastic) and is it structurally sound (are there cracks in the foundation and, if yes, the ok kind or the bad kind), how well is it built to withstand our extreme weather conditions (like water management and insulation), and the condition of the major building components (heating/cooling, windows, roof, plumbing and electrical), for example. Fortunately most of these items are covered by a Home Inspector, providing it can be seen easily.
Even when a property inspection reveals problems with a home (pretty much a certainty in most older Toronto properties) and you still want to proceed (no house is perfect, even when new), a home inspection can help you plan and budget accordingly, which is important in a city like Toronto with high housing prices and the possibility you're maxing out your mortgage and other credit products just to buy and maintain your home.
A standard property inspection gives you a starting base for recourse, as well as an out from your conditional contract if something doesn’t sit right. All in all, it is money well-spent. However, you bring up a good point. What is and isn’t covered by a property inspection and what do you need to know about it?
The Standard Inspection
A basic property inspection involves a visual inspection of a home’s major systems and components (i.e. roofing, structure, electrical, heating, insulation, plumbing, air conditioning, interior, exterior, property and site). The report will point out any repairs or necessary improvements and advise you on important information, like the time frame in which they should be addressed and approximately what kind of costs you might be facing.
The idea here is that any flaws within the structure and major systems represent the biggest threat to a home’s integrity and therefore the biggest risk (financially and health-wise). Buyers need to be able to weigh the potential for problems against the purchase price, and this is a good starting point.
But a standard property inspection is indeed just that: a starting point. When you consider all the potential problems that could be happening beyond your line of vision (and the inspector's) with a home and the potential consequences, it is a good idea to dig deeper.
As I’ve written about in my Healthy Home series, there are a number of risks that can be present in your home - most of which are not covered in the standard inspection - including the following which I address in more detail further down in this blog:
Some of these might be flagged in a standard property inspection as a possibility. Many may not, saying that in the spirit of due diligence and the protection that comes with making a prudent, researched decision when buying a home (even if an inspection uncovers “bad news”) you might want to consider extending your property inspection services. One thing is for certain about all inspections: you MUST vet a reputable inspection service. Did you know that before last year, Ontario didn't regulate home inspectors with any srequired qualifications or certification? Finally in April 2017, the government passed the The Home Inspection Act establishing minimum standards for home inspection contracts, home inspection reports, disclosures, and the performance of home inspectors. Be sure to do your research and choose a certified firm with many positive reviews/testoimonials. If you're unsure what exactly you're looking for, the Canadian Home Inspection Service provides a criteria for vetting companies and here's one of my past posts called Choosing A Home Inspector.
However, if you're seeking a personal recommendation there are two home inspection firms I personally recommend whom I have been using for years. One is National Home Inspection (I favour Mark or Richard) and Classic Home Inspections run by Brent.
How “Much” Inspection Do I Need?
The key here is that property inspector isn’t allowed to cause damage during their inspection (i.e. dig anything up, rip out walls to look behind them, etc. etc.) so it is very possible that there are issues that you won’t be able to identify at first glance.
Keep in mind that there are sellers who deliberately are trying to hide something as well, so you are well advised to leave no stone unturned, real-estate style.
How thorough should you be? That depends on your budget for inspection and some other factors (i.e. age of home, known problems in the area due to environmental factors, known problems with the builder/housing type, etc.). If your are negotiating a purchase, and you have the opportunity to make it conditional on your completing your due diligence, ensure your realtor includes a clause(s) which offers greater scope like "This offer is conditional on the Buyers engaging inspector(s) of their choosing to inspect the subject property". In other words, a conditional clause doesn't need to be limited to a "home inspector" or just "one inspection".
While it can be alarmist to delve deeper behind portions of a property “just in case”, if you have a gut feel, or better still evidence to suggest that a closer look is warranted, then inform the owner and realtors involved by explaining your suspicions and your desire to explore further to your satisfaction. If you want to open up walls, you will need the Sellers' approvals to complete further analysis, and it may require your agreement to return the dwelling to its previous state at your own expense if you do, or don't, proceed with the purchase. Is it worth it? It is if it’s about mitigating the risk of purchasing the right, or wrong, home then I'd say "yes".
Below is a list of some of the potential hazards a property may have which are typically not covered in a building inspection, and may warrant further due diligence for complete peace of mind:
Is The Property In A Termite Zone?
If the dwelling is located in a known termite zone, there is an elevated risk that the property may be subject to termite damage. Termites look for moisture and love wood, so nesting in a home is ideal, especially in areas where there has been water damage, or are naturally moist, like exterior wood stairs and downspouts. In addition to ordering an inspection from a pest company, you can reduce the likelihood of termites becoming unwanted guests by attending to plumbing leaks, avoiding wood soil contact and by removing any wood that is within 12 inches of the ground.
Termite damage can be devastating. I wrote about it here in this post: “Healthy Home: Termites For Our Anniversary” which incidentall,y shared my concerns over a Home Inspection that I felt was of a poor quality for missing some very obvious potential signs of risk for termite infestation) and Basement Blues where I found the partial basement with crawl space at high-risk for termites and, if found, would cost huge buck to remedy.
Buried Oil Tanks
Given the age of the housing stock in Toronto, buried oil tanks are a real possibility for many homes. In years gone by, oil was the heat of choice and homes usually had a reserve tank on property, buried somewhere in the yard.
Even though most homes have converted to more energy-efficient, more environmentally friendly heating methods, many oil tanks remain buried. Some homeowners may not even be aware that they are there, which is why if you suspect this might be problem, it is a good idea to get an inspection specifically for this problem. If you do have an oil tank and you purchase the property, you could be on the hook for environmental clean-up, tank removal and other things.
In the heat of summer, an inground swimming pools would be a welcome addition to any backyard, but they can represent a huge additional cost if they are damaged or leaking. Rips in the liner or the plumbing around the pool could happen at any time, which could represent a big repair bill. And, incidentally, a swimming pool does not increase your resale value and, for many, they're not considered desirable given the expense to maintain and repair, so an inground pool could actually narrow your pool (haha) of buyers. While I don't find above ground pools attractive (unless they are concealed to look more like an inground pool - ironically), they always give a future Buyer the opportunity to remove it.
Wells, Septic & Kitec Plumbing
While this doesn’t apply to homes, in urban settings, if you are considering a rural or leisure property (like a cottage) you may want to get a separate inspection done for your well and your septic system. Your financial institution will likely require a well certificate as part of their financing conditions to make sure that water is potable, but you may want to go one step further with testing. It is your water source after all! Here's my blog called, So You Want To By A Country Home? which addresses issues specific to rural properties.
As for septic tanks, they usually are good for many years, but there are conditions that can cause your tank to be damaged. This is very costly to fix and can cause a great deal of damage to your property. Better safe than sorry before you take on this cost.
During a standard property inspection, the inspector will do a visual inspection of existing plumbing, but he/she isn’t going to go behind the walls to do a deep plumbing inspection. Remember - no drywall will be removed, no flooring pulled up, etc. For instance, if you are looking at a home built (or renovated) between 1995 and 2007, be aware that there is a high probability that Kitec Plumbing might be present in your prospective home. Kitec had been a popular choice for plumbing material because it was resistant to corrosion (or so they thought). It actually corrodes at an accelerated rate, so not such a good choice after all. Corrosion means more plumbing leaks and water damage. You’ll want to know if this is present before you buy a home and, in Toronto, this includes condominiums. There are dozens of condos in Toronto with Kitec Plumbing. In my March 2018 - Home of the Month - The Queensway, I shared how my Buyers negotiated a purchase with the Seller completing the replacement of the Kitec Plumbing as part of their Agreement of Purchase and Sale.
Similarly, you might benefit from plumbing inspections that make use of more sophisticated technology, like cameras that can check out sewer lines and drains deep into the plumbing network to identify potential problems.
We're not talking about of mold around the edges of the bathtub - that's an easy fix (not to mention visible!) What a general home inspection will miss is unseen mold, behind walls, above ceilings, etc. Usually the product of a larger moisture problem, a major mold growth can not only pose a serious heath concern for those breathing it in, but it can also damage the structure of your home over time, and affect resale value.
It can grow upon a wide variety of substances that contain organic matter, like food, paper, wood, carpeting, leather, cardboard, wallpaper, ceiling tile, insulation, etc. etc. Although mold and mildew are undeniably gross, they do serve a function in the great outdoors, by helping organic matter break down and enrich the soil. However, when you encounter this environmental phenomenon within the walls of your own home, where it shouldn’t be, then you run into health and structural risk.
As far as health problems go, if you are living in a moldy house, you could be faced with respiratory problems that include sinus, eye and nose congestion. If you already have a respiratory condition, like asthma or COPD, the presence of mold exacerbates it. Children, the elderly and pregnant women are more vulnerable. People also report having headaches commonly with mold contamination too. Take a more in-depth look here: Healthy Home: WHat You Need To Know About Household Mold.
Again, the age of your prospective home will factor into whether or not you want additional inspection when you are looking for things like asbestos.
Prior to 1990, asbestos was a very popular material for fireproofing and weatherproofing in homes. However, there are serious health concerns around this material, so you will want to be alerted to its presence. I'm always on the lookout for it. Clues include the wrapping around hot water radiator pipes in a basement, forced air ductwork (lift the floor register to see if there's any paper under it which may contain asbestos) old linoleum in dated kitchens, and those old ceiling tiles owners once attached to cover cracking plaster. Do note safe removal of asbestos requires a trained professional.
Radon Gas Exposure
Radon is radioactive gas that is odourless, colourless, and tasteless. It is produced by the breakdown of uranium found in sediment (soil), rocks, and water. When radon is released into the atmosphere it gets diluted and poses a risk to human health. While only about 7% of homeowners are living with dangerous levels of radon in their homes (according to a 2011 study by Health Canada of 14,000 properties), it is a serious concern. When inhaled in larger quantities, remains in the lungs and causes decay, and eventually can contribute to cancer. In fact, it's the second leading cause of lung cancer in Canada! And you'd never know you were breathing it in.
In this blog post, we talk about where it comes from, how it accumulates, te health risks, and how to remedy the problem: Healthy Home: A Guide to Radon Exposure
Health Canada reccommends that a radon inspeciton is done for every real estate purchase. Here is an excellent resource from the Canadian Real Estate Association (CREA) that provides comprehensive information about radon: A Homeowners Guide To Radon.
While a home inspector will look in an accessible attic to assess the insulation, if your home was built or renovated before the 1990s it may contain one of numerous options: fiberglass batt insulation, blown in cellulose, sprayed polyurethane foam or even vermiculite. This latter choice, popular between the 1940s and 1980s, may prove problematic depending on its origin, as it may contain amphibolic asbestos fibers. Unfortunately, you can't tell just by looking at it, so it has to be analyzed in a lab. Like all existing asbestos items in a dwelling, you can leave it undisturbed and you're ok, but the moment you move it you're at risk. So don't sweep it or vacuum it up, and don't store belongings in the attic.
Here's a comprehensive piece from CBC on Vermiculite: FAQs
Lead Paint, Pipes & Soil
If your home was built before 1978, there is a good chance it has lead-based paint. Lead from paint, including lead-contaminated dust, is one of the most common causes of lead poisoning. Sometimes it's under layers of newer paint, and as long as it remains undisturbed the lead paint is usually not a problem. Deteriorating lead-based paint (peeling, chipping, chalking, cracking, damaged, or damp) is a hazard and needs immediate attention.
Lead is used in some water service lines and household plumbing materials. Lead can leach, or enter the water, as water flows through the plumbing. Lead pipes and lead solder were commonly used until 1986. In Toronto, residents who live in homes built before the mid-1950s can submit a tap water sample to the City for testing, free of charge, to help determine the amount of lead in the water. This is because prior to the mid-1950s, lead was commonly used to build pipes that deliver water from the street into residential homes. Lead pipes were not used in apartment and other buildings with more than six units, regardless of age. Lead is too soft to handle the pressure needed for these types of buildings. Often I see homes where the dwelling has copper piping but the original intake is lead, so make sure your inspector checks for this though it can be tricky to confirm. Here's the City of Toronto site on Lead Testing for Residents.
Given lead is naturally-occurring, and it can be found in high concentrations outdoors. Soil may also be contaminated from past use of exterior lead paints, leaded gasoline in cars, from industrial sources, or even from contaminated sites, including former lead smelters. Lead in soil can be ingested as a result of hand-to-mouth activity that is common for young children and from eating vegetables that may have taken up lead from soil in the garden. Lead in soil may also be inhaled if resuspended in the air, or tracked into your house thereby spreading the contamination. Did you know back in the 1970s, children living in South Riverdale were discovered to have high levels of lead in their blood? One firm, a lead smeltering factory on Eastern Avenue called the Canada Metal Company was identified as the main culprit. It belched poisonous emissions across the east end for decades. To remedy the problem, over 1000 houses and three schools in South Riverdale underwent a massive soil remediation program. Click here for community advocate Laura Jone's documentation of her, and her neighbourhood's efforts to combat and remedy lead soil contamination, or check out my post containing more info on Why Toronto’s East Side Real Estate Has Historically Been Cheaper.
Knob And Tube Wiring
As I discovered personally in my transformation of an 1880s manse in Charlottetown, my own property inspector missed the existing knob and tube wiring during a standard property inspection because of the limitation in going behind the walls. (If you love a good renovation blog you may enjoy my Tales Of Upper Hillsborough journey included on Urbaneeer.com.) Homes constructed between 1880 through the 1940s may have knob and tube wiring still. This is a special concern because of the potential fire hazard and how this will influence your insurance premiums. If you determine this is a possibility, it is a good idea for additional inspection.
While it doesn't fit in seamlessly with the individual risks above, if you're an urban dweller, it is prudent to be aware of sick building syndrome, which can apply to condominiums and freehold house alike. Here's our discussion: 'Healthy Home: Sick Building Syndrome'.
All in all, you can expect a general home inspection to discover about 80% of the repairs that will be required in the first year of ownership. This will significantly reduce your risk of purchasing a problematic property, but it can never eliminate it. Also, it is not an insurance policy, so inspectors and inspection companies are not held liable for errors or things missed, beyond (possibly) a refund of the inspection cost. So can you afford to forego a home inspection clause when offering on a property? The answer, unfortunately, varies on a case by case basis and must be made based on all the information you have, as well your intuition. Hopefully now that you know what won't be covered in an inspection, the choice will be clearer, but never hesitate to get advice from a seasoned realtor!
***Addendum*** There's a new product that's recently coming to market which we've just been made aware of! The first of its kind in Canada, Home Protection Solutions offers a comprehensive home inspection service (by Amerispec) with warranty options for both Buyers and Sellers that cover major household blind spots for heating/cooling, roof, foundation, septic and swimming pools. Check it out!
For more information, head over to FCT!
Did you enjoy this post?
Here's some of my other blogs which may be of interest to you:
Buying a home is a leap of faith, no matter what the circumstance. You can reduce the stress and expense of the unknown by embracing the details when it comes to your due diligence. With a comprehensive education in housing and an in-depth knowledge of Toronto’s housing stock and neighbourhoods, I can guide you through this process. We are here to help!
Looking for a comprehensive overview of the Toronto Real Estate Market? Consider reading Urbaneer's Toronto Real Estate Forecasts!
~ Steve & The Urbaneer Team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage - (416) 322-8000
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