There’s no shortage of chatter about the current Real Estate Market in Guelph. It’s such a wild, wild Seller’s Market that it can feel a bit hopeless for Buyers when it comes to conducting the matters of basic due diligence recommended when buying a home.
What, exactly, do I mean by that? I mean that, in a more balanced market, we see conditions attached to most offers, including the ability to arrange mortgage financing, insurability, and home inspections. In today’s Guelph market, we’re seeing few (if any) of those conditions on offers at the negotiating table… if we can even call it that, these days.
For Sellers, the goal is to sell quickly and for top dollar. Bear in mind, also as a reflection of our market conditions, many people are forced to buy a home first and then head to market to sell their home… talk about stressful on their end of the transaction! So, Sellers look at conditions and they get nervous about deals falling through. Home inspections, of course, are occasionally “deal killers,” and for this reason, of late it has become almost impossible to achieve a successful outcome in a “bidding war,” with an inspection condition attached.
And so, Buyers are giving up. They’re hearing that clean offers are all that’s possible now, and they’re just foregoing the home inspection process. But, I think there’s a better way – a way for Buyers to still remain competitive at the negotiating table, while conducting important due diligence. When you fall in love with a house and have a few days to wait before you can compete for it, you’ve got plenty of time to conduct a pre-offer home inspection.
How it Works:
A pre-offer inspection is really no different than what would have formerly been the inspection a Buyer would book after an offer acceptance. In response to market conditions, some Guelph home inspectors are offering special options – i.e. reduced scope / discounted inspections – as a way to encourage Buyers not to give up on the inspection process.
A home inspection has to be requested, be it before or after an offer acceptance. No, you can’t just start poking around on the roof or in the attic of a house during a Realtor-guided showing. A qualified home inspector would be going with you and your Realtor to conduct the inspection – typically at least a day before offers are going to be reviewed. Could the Seller refuse? Yes. But I’ve only had that happen once – and it was a sure sign to my Buyers that it signified both 1) a lack of good faith in the process; and 2) the likelihood that there were issues the Sellers didn’t want uncovered. They walked away… smart move.
What are the risks? Well, the obvious is that you’ll spend money on the inspection and then still lose in competition. I’ve had this happen with Buyer clients a number of times, and I won’t lie… it pretty much sucks. However, as a Buyer, you have to go into this process knowing that the purpose of the inspection isn’t just about you having a better shot of winning. The point of the inspection is to learn about the home, and to identify what’s great – or not so great – about it… and if, indeed, you want to offer on the home, after all. At the end of the day, there may always be someone willing to pay more or waive more conditions, etc. But, at least you can go into the offer stage without that tricky condition attached to an offer… but also with confidence that you’re buying a solid home.
The actual financial risk is relatively small; I would estimate from $250 to $450 in Guelph for an inspection today. If you lose in competition, it’ll sting – there is no way around that. But what’s the bigger wound? Losing a few hundred dollars – or buying a home and inheriting unforeseen problems and expenses? A home is one of your biggest investments – and it’s meant to be a sanctuary. Waiving all conditions and buying on a hunch don’t sound like steps along the path to contented home ownership.
Oh, and I’ll end with a little secret. The market is starting to cool a bit. No, it’s not crashing – but our dire shortage of inventory is shifting and the 2017 Spring Market is a-foot. Best case scenario for negotiating? You conduct that pre-offer inspection, then show up to the offer table and find yourself without competition. The result is a clean offer, a motivated Seller, and you just might get a little consideration on the purchase price. Imagine that.