Real Estate Talk: Fear of Inspection - Westmount Magazine (2024)

An inspection is not worth stressing about if handled properly

By Joseph Marovitch

Updated December 20, 2023

A few years ago, I was selling a beautiful lakefront property in the Laurentians. The property received many visits. One Sunday, during an open house, a buyer walked in and perused every inch of the property with a negative comment for each of those inches. A seller would assume with all the buyer’s comments, there would be no further interest or offer.

I assumed the opposite. A buyer either comments negatively on a property because they want to purchase but want to set up the seller with lower expectations, or the buyer is an ass. A buyer with proper etiquette either offers positive comments or says nothing at all.

Lo and behold, this buyer provided an offer a day later. The offer was not terrible, but not great either. After negotiation, the buyer and seller came to an agreed price, and the offer was accepted, with conditions. One of the conditions was inspection.

During the inspection, the buyer followed the inspector around the house with the same negative attitude he had during the first visit, a negative comment for each part of the house. When the inspection report finally arrived, it indicated that the roof required repair, the pressure in the kitchen sink was low, the garage door did not open quickly enough, the electrical system only had 200 amps (which is more than sufficient), and other sundry items. The buyer requested, in writing, based on the report, a $50,000 reduction in the purchase price.

My client gave the buyer the option to accept the property as is at the offered price, or cancel. The buyer purchased, as is, at the original offer price. The buyer was trying to use an inspection to reduce the price and failed.

There was no actual indication of any significant structural damage in the roof, walls, or foundation. There were no indications of code violations or bylaw infringements, and there were few photos in the report.

Nonetheless, my client was concerned and was considering the requested reduction. I suggested my client have a second inspection with another inspector and I offered three different yet very experienced, professional, and well-known inspectors. My client accepted and chose one of the inspectors. The second report indicated with proof and photos that there were no significant structural issues that required repair.

My client gave the buyer the option to accept the property as is at the offered price or cancel. The buyer purchased, as is, at the original offer price. The buyer was trying to use an inspection to reduce the price and failed.

A seller accepts an offer to sell their home. The offer has conditions that include an inspection. Many experienced individuals who have sold more than one home know the feeling that comes with the condition of inspection.

What if the house has a defect the seller was not aware of? What if the windows have a crack, the foundation is damaged or the fireplace allows smoke in the house? What if there is nothing wrong but the buyer is making up issues to get a price reduction? These are all reasonable concerns but they are not worth stressing about if they are handled properly.

‘Legitimate issues that can devalue the house are headaches you do not have to deal with unless you want to.’

Legitimate issues that can devalue the house are headaches you do not have to deal with unless you want to. An experienced eye can easily detect illegitimate issues.

Should an issue be detected in an inspection, the buyer is required to provide the seller with a full copy of the inspection report and a written document stating what the problem is and what they would like to do to remedy the situation. The buyer can request a price reduction or ask that the seller repair the damage to the buyer’s satisfaction, or they can cancel the sale.

Should the buyer request a specific price reduction, the seller should get a couple of contractors to provide quotes for the work. These quotes will validate if the work is required and what it will cost. If the issue is legitimate, the buyer and seller can usually come to a compromise. If the issue is not legitimate, the seller must decide if they want to sell and if they are prepared to compromise or not. The seller must also guess the buyer’s motivation to determine if the buyer will try and cancel the sale or not.

This is not difficult for an experienced real estate broker or experienced individual who has purchased and sold several properties.

‘The bottom line is, if the house has an issue that can devalue the property, it should be dealt with by reducing the price or repairing the damage.’

The bottom line is if the house has an issue that can devalue the property, it should be dealt with by reducing the price or repairing the damage. It is that simple. We cannot sell a home with defects. It will come back to bite us in the ass.

Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, clickhere.

Next article: Criteria for purchasing a condo

State Of The Market

Canada Prime Rate today: 7.2%
Canada Inflation today: 3.12 %

The value of a property rises and falls according to supply and demand. If there is more supply and less demand, the value falls. If there is more demand and less supply, the value rises. This is the assumption used by many to explain the current market.

However, the bigger picture is that the Federal Bank of Canada monitors the Canadian inflation rate and manipulates it by adjusting the Bank of Canada interest rate, which in turn determines the mortgage rates of the five major banks: CIBC, RBC, BMO, Scotiabank and TD.

The goal of the Bank of Canada is to reduce inflation by raising rates to slow down the economy and thereby make products and services more affordable for everyone. To a degree, this objective is being achieved.

What must be examined to understand where interest rates are going are key indicators such as:

• The global economy and whether it is slowing down or not. According to the Bank of Canada, the global economy is slowing down with lower energy, food and general goods prices.
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• The Canadian demand for goods and services declining, causing inflation to recede due to higher interest rates.
  .
• Canadian job vacancies falling and wages increasing (except in Quebec, apparently, we shall see).

If all these indicators continue in the right direction and inflation continues to decline, we will see interest rates lower. With inflation decreasing, many economists believe the Bank of Canada will reduce rates in the latter half of 2024.*

‘… compared to the rest of the world, our economy is fairly stable, which is why so many foreign investors like to purchase property in Quebec to hold their capital and increase it.’

One other item to note is that while many think home prices are high in Quebec, it should be noted we are the least expensive province in Canada. Furthermore, compared to the rest of the world, our economy is fairly stable, which is why so many foreign investors like to purchase property in Quebec to hold their capital and increase it. Language issues or not, Quebec is an excellent investment in the long run.

Have a great week!

* Note: Inflation determines interest rate, and interest rate determines real estate supply and demand.

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Other articles by Joseph Marovitch