Home inspector Vince Burnett has been in the industry for 17 years and thrived in other red-hot real estate markets. He should be run off his feet these days, but he hasn’t done a single home inspection in two weeks.
As few as 10 per cent of homes sold in Greater Vancouver and the Fraser Valley are being inspected before deals close, a number that is drastically down from about 75 per cent a year ago, and an illustration of the latest concern in a sizzling market where some realty firms and mortgage brokers were already worried about a rising number of so-called no-subject offers.
Buyers going after limited listings are lobbing these in because, with prices spiralling ever higher, they are under intense pressure to find other ways of being competitive with their bids.
The Home Inspectors Association of B.C. is calling on the B.C. government to put in place a seven-day cooling off period to temper a market where it says buyers have “tight timelines of as little as two days from open house to making an offer in a competitive situation (with) no time for proper due diligence, including a thorough inspection. Fear of losing the home in a competitive bidding situation has encouraged buyers to take the dangerous step of making subject-free offers.”
The association warns it’s a precarious situation for buyers, but the rise in subject-free offers has hit home inspectors hard, too.
“Usually in January there is quite a bit of work, other than in the first week. Then you get into the spring season, March and April, and it’s 10 or 12 inspections a week, and you are going,” said Burnett, who is also president of the HIABC.
For years, he has been doing around 325 inspections a year, but right now, heading into July with no sign that there will be any pickup, he said: “I haven’t done 100.”
Shawn Anderson, a Vancouver-based home inspector, has his own gauge: “I was refusing about 20 to 30 inspections a week a year ago. And then all of a sudden, I was down to refusing two a week. People are buying blind. Now, I am going in after they buy and looking at the horror story.”
Anderson used to do very few inspections after a sale, but now some 30 per cent of his business is on homes that have already been sold.
“Recently, I had one house that was so catastrophic, it needed some $350,000 in repairs. They were not expecting that at all because it was newly renovated. But that only concealed all the issues. It was lipstick on a pig. It needs a new foundation, piping, you name it, it needs to be done,” said Anderson, who has been an inspector for six years and was a builder for 25 before that.
The HIABC is warning more of these cases will likely emerge. On Tuesday, it highlighted its point with the case of a Kevin Girard, who bought an East Vancouver home without doing an inspection.
Last October, the 40-year-old and his spouse bid $955,000 on an older home in Hastings-Sunrise. It was listed at $899,000 and “we heard there were five bids. We were in the middle. We expected this and wanted to have a differentiating factor.”
Ahead of taking possession, “we had asked if we could get in to do some measuring for our furniture, but they wouldn’t allow it,” said Girard.
On moving day, they arrived to find “an absolute disaster,” said Girard, who described the home as being “not safe for our one-year-old daughter. That was the biggest problem.”
There were also holes in the wall, exposed electrical lines, flooring that didn’t meet walls, kitchen cabinets sitting unevenly over dirt floors covered in rodent droppings. The house, when they had seen it, had been “staged. They had positioned things to cover up problems. Drywall had been ripped out. There weren’t enough circuit breakers for things like the stove to be powered. We had to MacGyver things to make them work.”
Real estate agents have come under fire for fanning the heat of multiple-offer situations with false claims that competing bidders have higher and more appealing offers.
But Girard, who described himself as a financial planner with some 550 clients, said that when it comes to managing his own affairs, “I’m a risk-taker. I probably wouldn’t have backed out. This was my shot in Vancouver.”