Home Inspections are Back!

The Importance of Home Inspections in Real Estate Transaction

By Mirjana (Mira) Markovic

With the pandemic in the rear-view mirror, purchasers once again have the ability to do their due diligence prior to purchasing a home. As a result, we are now seeing the return of conditional offers which are subject to home inspections and financing conditions.

To put it into perspective, a home inspection is an objective examination by a certified home inspector (“inspector”) of the physical structure and condition of a property. Generally, the inspection assesses the following points of interest which include but are not limited to: plumbing, electrical, structure, roof, exterior, interior, HVAC, ventilation system, insulation system, and safety hazards. Once the inspector completes his/her evaluation and identifies any potential issues, he/she will produce a report that will provide certain recommendations on how to address issues that may arise.

Understanding the home inspection process is a crucial aspect of the real estate transaction for all parties involved, as it can impact the decision-making process and the potential outcome of the transaction. Let us take a closer look.

Hiring A Home Inspector

In Ontario, inspectors are regulated by the Ontario Association of Home Inspectors (“OAHI”) and the Canadian Association of Home and Property Inspectors (“CAHPI”). These organizations set standards of practice and a code of ethics that inspectors are obligated to follow. In addition to the above, the government has established the Ontario Association of Home Inspectors Act (“AHIA”), which outlines the requirements for becoming a certified inspector within the province. Candidates are required to go through vigorous training and obtain numerous certifications before they become qualified. This means that when you hire an inspector he/she will perform the inspection to the above standards giving you peace of mind that the process is conducted properly and diligently.

Therefore, when you are deciding on an inspector, it is important to check that they are certified and that they are a member of the OAHI and/or the CAHPI.

Purpose & Cost of a Home Inspection

Purchasers will often execute an Agreement of Purchase and Sale that is conditional and subject to a home inspection. The seller will typically give the purchaser between seven (7) to ten (10) days to satisfy the condition and decide whether to move forward or walk away from the transaction.

Once retained, the home inspector will visit a property, complete the assessment, and produce a written report that will comment on whether the property complies with the Building Code, the external structure, the internal home systems (i.e. HVAC), any necessary or recommended repairs, maintenance concerns, and any costly or hazardous issues. For purchasers, the home inspection report provides a cost and benefit analysis so that they can determine if it is worth investing in the property long-term by taking into consideration the inspector's findings. For the sellers on the other hand, a pre-listing home inspection will assist in identifying and addressing any potential issues before listing the property on the market that could strain the sale process (i.e. having a purchaser back out of a deal) and further avoid last-minute surprises.

The cost of a home inspection can vary by city, municipality, region, size, and age of a property. Generally, a home inspection costs between $200.00 to $600.00 to complete. It is important to note that most general home inspections will not check asbestos, radon, methane, radiation, mold, mildew, fungi, pests, sewer, or septic systems. These are all considered specialized inspections and involve an additional fee. Specialized inspections are recommended for older homes, cottages, and farm properties.

Although a home inspection is optional, it is recommended. It is money well spent and will give both the purchasers and sellers peace of mind and avoid problems during the transaction.

Areas of Analysis Under the General Home Inspection

A home inspector will generally assess the following areas when completing a home inspection:

Exterior inspection:

• Walls;
• Foundation;
• Grading;
• Garage or carport (if applicable);
• Roof, attic, and chimney(s) (if applicable);
• Exterior water drainage and water disbursement
• Waste systems as applicable (septic systems in a rural area or have an older home);
• Porches, decks, and patios;
• Yard/Garden as applicable; and
• Wallcoverings.

Interior inspection:

• Plumbing;
• Electrical system;
• Heating, Ventilation, and Air Conditioning;
• systems (HVAC);
• Kitchen appliances;
• Fire safety;
• Bathrooms;
• Lead paint;
• Interior water drainage and water disbursement;
• Flooring quality;
• Noxious gases if applicable;
• Windows and doors;
• Interior walls;
• Basements and crawl spaces; and
• Ceilings.

It is important to note that even though the above items will generally be assessed by an inspector, the assessment also depends on the procedure they follow as set out by the organization and or/ licencing bodies they are part of. In areas that are rural, it may be part of a general inspection to check for radon, and methane however, in the city this falls under the specialized inspection category as mentioned above.

The Difference between a Home Inspection & a Home Appraisal

The concept of a home inspection versus a home appraisal is different. Each is conducted for a different purpose but both continue to spark confusion.

An appraisal is typically conducted by a mortgage lender who sends out an appraiser who will use various valuation methods to assess the value of a home (i.e. recent sale prices, comparable homes in the area). The appraiser’s report will assist the lender in determining how much money it is willing to lend on any given property. As mentioned above, an inspector assesses the overall condition and safety of a property and determines any potential issues to be addressed either prior to a purchaser buying the property or prior to the seller listing the property on the market. Both the inspector and appraiser also have different education, training, and certification.

Concluding Remarks

Home inspections provide a thorough assessment of the condition and safety of a property therefore, it is prudent to have one completed prior to closing a real estate transaction.

Once the inspector completes the inspection and a report is produced, both purchasers and sellers should review the findings diligently. For purchasers, the report may identify issues that warrant further investigation or negotiation with the seller (i.e. request that the issue be rectified or walk away from the transaction). Waiving an inspection may be a risky decision that could prove costly in the long run. For the sellers who obtain a pre-listing inspection, the report will provide valuable insights into the property's condition and help them address any issues proactively before listing it on the market, increasing its appeal to purchasers and minimizing the risk of last-minute surprises.

While we all have busy schedules, it is crucial that you make time to attend your home inspection with your inspector and real estate agent who will assist you with any questions that you may have in relation to the information that is being presented during the process. This will ensure that you have the support that you require when you ask questions and further assist you in how to maneuver around any potential issues that may be found. Whether you are buying or selling a property a home inspection is an important part of ensuring a successful transaction.

I hope that this article has provided you with some helpful information. If you have any questions, please do not hesitate to contact me at mira@sorbaralaw.com.