Here’s a story for you…

My son, Duke, was born on February 2nd, 2020.

At that time, we had been in our house for exactly 18 months.  Our new house.  As in, our brand-new, built-from-the-ground-up home that had never been occupied by anybody.

Moving my then 3-year-old daughter Maya from her crib to her bed meant a new form of sleep-training that might take a night, but might also take three weeks.  Ask any parent what this is like and the opinions and methodology will be all over the place.

I believe that first attempt at crib-to-bed sleep training was about one or two weeks into February.  I’ll never forget that night.  And no, it’s not because Maya went into the bed and stayed there like a good girl, but rather because about ten minutes after we started, my wife burst through the door.

“Our basement is flooded,” she said.

Flooded?  How could that be possible?

Wait….flooded?  This was likely an exaggeration, of course.  Perhaps the toilet overflowed?

“Flooded?” I asked, waiting for a definition.

“FLOODED!” she said.  “There’s water up to my ankles.”

Ah, right.  Flooded.

“Daddy, why did the basement flood?” my wide-awake daughter with the inquisitive mind just had to ask.

I went downstairs to investigate the term “flooded” and found that I was in agreement with how my wife had used the word.

Flooded.

Gosh-darnit-to-heck.

The sump pump had failed, and based on the time of year, the temperature, and the amount of snow that had thawed over the past couple of days, it meant hundreds of gallons of water were not pumped out of the pit in my furnace room, but instead, flowed out of that pit, across the floor, under the door, and the walls, and covered every square inch of my basement.

That was a fun night!

A newborn baby in one room, a highly-interested 3-year-old in another room, and me downstairs, sopping up water with every towel in the house.

I investigated the problem as best as I could and quickly deduced that the sump pump wasn’t working.  Beyond that, any attempt at answering “why” was beyond me.

Eventually, I had Roto-Rooter come in on an emergency basis, install a new sump pump, and then send over their “disaster recovery specialist.”  That’s a story for another day; one which I might have told.  Suffice it to say, these guys pray on misery and misfortune…

Not central to the point I’m going to make, but in order to complete the story, I’ll tell you that we repaired about 90% of the damage in the next 4-5 weeks, but when COVID was upon us circa March 16th, 2020, we stopped.  Here we are, two years later, and we’re still missing baseboards throughout the basement.  Maybe we’ll get on that this summer…

So what happened, folks?

Why did my basement flood?

I did a full home inspection on this house when I bought it.  After I bought it, but that’s a topic for later in this post.

Why didn’t the home inspection catch this?

Umm, well, because a home inspection isn’t really meant to predict the future.  Nor are most home inspectors able to look into a crystal ball.

You know that I dislike naivety and entitlement and that I love ration and logic.

So can we talk about what a home inspection really is and what it can and can’t do, and then look at when/why/where we should conduct them?

The sump pump that failed at my home was removed and somebody from TD Insurance came and picked it up.  They took it to a lab someplace, and apparently tested it, so I’m told.  This is how insurance companies work, for your information.  They’re not going to write a cheque for a $25,000 claim and just take it on the chin.  They’ll go after the company that manufactured the sump pump and the company that installed it.  They’ll try whatever they can to get back the money they paid out for the claim.

So what was I told in the end?

“We’re stumped.”

That’s what the rep at TD Insurance told me.

The sump pump was manufactured in 2017, installed in 2018, and failed in 2020.  It has a 15-25 year life expectancy.  My rep at TD Insurance said, “We don’t know what happened.  Honestly.  Maybe it was just a lemon.”

So what could I, or the home inspector ever have done about this?

Nothing.

And yet I feel like there’s this belief out in the public that a home inspection is going to be a lifetime failsafe against anything that could ever happen in a person’s home.  This belief can have disastrous consequences, since it often discourages buyers from learning about their home, undertaking preventative maintenance, and regularly checking up on systems in the home.

A home inspection is exceptionally helpful, but not only as an investigation into red flags in the home but also to teach the buyer about this home as well as houses in general.  They can be relied upon before making an offer, or after.  A buyer can use an inspection provided by the listing agent, or choose to do their own.  And yet, I feel like there’s an unreasonable reliance on inspections by inexperienced buyers, and that the concept of the inspection is made way more complicated than it actually is.

Let me break it down for you like this: there are eight things I look for in any home that I would call a genuine “concern,” but which may not be a deal-breaker on their own.

All but the last are building materials that are no longer used, and thus are problematic in 2022:

-clay pipes
-lead pipes
-Kitec plumbing
-knob-and-tube wiring
-aluminum wiring
-asbestos
-Urea Formaldehyde Foam Insulation (UFFI)
-mold

That’s it.

Those are the big eight.

Sure there, are potentially larger issues.  Like, say, a structural defect.

But truth b told, your average home inspector cannot deduce whether or not there’s a structural issue.  They’re simply not qualified to do so, but also because they don’t have x-ray vision.  A crack in the concrete wall “walkout” from the basement could be absolutely nothing; it could be a hairline crack in the stucco that’s slapped overtop of structurally sound cinder blocks.

But we all live in fear of this notion of a “structural issue.”

I don’t want to put more fear into you, but there are houses that have a significant lean to them which have no problems with the foundation.  If that house is a Victorian, built in 1884, it could have moved a little bit back in 1942 and stood still ever since.

You simply don’t know.

Most structural issues are found after major damage has been done.

And what about termites?  Again, most home inspectors will note “consult a termite expert” in their report if it looks like there could have been some activity.

But when was that activity?

Most good real estate agents will know what a piece of wood that had been chewed on by termites looks like, but was that chewed on last week, or was that chewed on forty years ago?  To figure out if there are currently termites, a separate inspection would need to be done by AETNA.

So let’s say that one of those eight “concerns”  I noted above is present in an inspection.  Does that mean the inspection “fails?”  No.  Inspections aren’t pass or fail, since this isn’t a television show.  A house full of knob-and-tube wiring is a non-starter to some buyers and a non-issue to others.  There are insurance ramifications, but for experienced buyers, it’s simply a matter of writing a cheque to any number of electricians who can replace the wiring and then a painter who can patch up the holes and paint over the damage to the walls and ceilings.

What about an old clay pipe running under the house?  Is that a deal-breaker?  To some, yes.  To others, not at all.

A cast-iron waste stack?  No biggie.  To me, that is.  But others will read online about the perils of cast-iron and decide this house is a money pit.

If a house had all of the eight items above, plus a cast-iron waste stack, and termite damage, and a wet basement, plus 35-year-old shingles, and fuses instead of breakers, would it be a problem?  To 98% of end-users, yes.  But to builders or an end-user looking at the property and not the house thereupon, it’s not an issue, since that house will be gutted and renovated for $500K or more.

A home inspection, in its simplest form, is a summary of findings from an expert.  It contains the ages and condition of the systems; the hot water tank, the furnace, and the air conditioner, although any of us could go downstairs and read the tag.  It contains the ages of the windows and the roof; some exact, some estimated.  It contains notes about wiring, plumbing, heating, cooling, roofing, including ages of building materials and systems, and the condition of those.  The inspector will look in the attic to see if there’s sufficient insluation, as well as look for mold.  The inspector will check to see if there’s any trace of water in the basement.  They’ll test the outlets.  They’ll let you know if there’s an outlet in the bathroom that’s too close to a water source – one that doesn’t have a GFCI.  They’ll look to see if there’s good water pressure in the kitchen and bathrooms.  They’ll make a note if the downspouts are clogged or don’t discharge far enough away from the house.  If there’s a missing handrail, or the handrail isn’t to code, they’ll make a note of that too.

And there are another five, ten, or twenty notes to be made about either features of the house that could be repaired or upgraded today as well as items to be on the lookout for tomorrow and five years from now.

On the whole, a home inspection is a guide to what may eventually be your house, and how to maintain that property.

It’s also an explanation of what the systems are, how they work, and what you need to know.

Most buyers have no idea what a sump pump is, how it works, or why they need one.  A good home inspector will walk buyers through the house and explain all this to them, but that’s not say that a buyer, using a seller-provided inspection, can’t Google “sump pump” and watch a few videos.

Home inspections are incredibly helpful and exceptionally necessary in many cases, however, they are not a fail-safe.

A client of mine emailed me in January to say that they had water coming in from the foundation and noted, “We want you to speak to the listing agent about this, and we’ll speak to our lawyer.”  The problem was: they bought this property in January of 2021.  That was twelve months before this problem occurred.

“David, this wasn’t noted in the inspection,” he told me.

And then I told him, in the form of the tough love that he did not want to hear at that moment, “A home inspection can’t see a year into the future.”

In order to have any claim against the seller, we’d have to find fraudulent misrepresentation, which simply wasn’t the case.

This was like my sump pump failing.

Sh!t happens when you own a home.

Last week, a client emailed me this article:

“Home Inspections Aren’t Always An Option.  Here’s How Buyers Can Protect Themselves.”
Canadian Press
March 24, 2022

This was a Canadian Press article so it was picked up by many outlets including the Toronto Star, Global News, etc.

The article makes it sound like buyers are not able to do inspections, but that’s just not true.

The truth is: buyers usually don’t want to spend the money!

The article tells us what we already know:

That’s because, like Sumar and Saggu, they’re competing for a home in the country’s red hot real estate market — a market where the home inspection clause, once considered a standard and essential part of any real estate contract, is no longer an option in many locations.

“We put in about 12 or 13 offers,” said Sumar, adding the couple was ultimately unsuccessful in finding a home and have decided to wait a few months to see if things cool off before trying again.

“We knew that putting an inspection clause in was not even a possibility.”

We know this, right?

This used to be something I had to explain on TRB or to my buyer-clients, but now we know this, and we know why.

In a seller’s market, where one property garners interest from twenty buyers, the seller is in a position of leverage, buyers look to gain an edge, and unconditional offers result.

Now, a good listing agent will pay for a pre-inspection.  I do this on every single property I list.

So the idea that a buyer “needs a condition on inspection” is simply not true.  They want one.  But don’t need one.

In the case of properties listed without an inspection, a buyer lamenting, “It’s not fair that we can’t make a conditional offer so that we can do an inspection,” just isn’t thinking hard enough.

Why can’t that buyer do an inspection before offer night?

They can.

They just might not want to.

My colleague told me last week that her buyer-client said, “I’m not going to risk $800 on an inspection for a house that I have no guarantee of obtaining on offer night.”

That house was listed for $1,895,000 and it sold for over $2.3 Million.

Refusing to “risk” $800 on a $2.3 Millon asset is short-sighted and ultimately equates to a “rounding error,” by definition, but I think other buyers in this position really, truly need to think twice about the true cost of home-ownership.

“Something is going to go wrong in this house over the next few years,” I tell my clients as a closing gift.

Every house has issues.  It doesn’t matter the age or who built it.  Every single house has problems.  The goal is to learn as much as you can about houses and preventative maintenance, and don’t ever get complacent.  Don’t ever get cheap.  Address issues before they arise, where possible.  But always address the issues in front of your eyes, right then and there.  And for the love of God, learn about your home!  Learn about home ownership!

Can you imagine how many people don’t change the filter on their furnace, for example?

I’ve had clients who never knew they were even supposed to change the filter.  And that’s after a decade or more!

So while a home inspection can point out potential pitfalls in a property before you ever consider buying it, many of the issues experienced by home-owners are ones that could have been avoided or potentially prevented.

The article above also contains this:

“Doing a pre-inspection – yes, it has to be on your own dime – is still something I highly recommend,” he said. “Find an expert, maybe a home inspector or someone with a good construction background, to do a walk-through with you.”

If that can’t be arranged, another option for homebuyers is to request access to the property for an inspection between the time when a deal goes firm, and possession date. While getting out of a deal after the closing date isn’t necessarily easy, it can potentially be done if an inspection turns up a major problem.

Houston, we have a problem!

Look at the second paragraph.

They said, “While getting out of a deal after the closing date…”

This is an error.

They don’t mean, and can’t mean, “closing date,” because that’s the date when the sale closes.  Like, as in, “closing date!”

You can’t “get out of a deal” AFTER it has closed, because that would be tantamount to a refund.  This is simply a mistake in terminology, but it has a massive impact on the advice given.

What they must have meant was, “While getting out of a deal after the deal has gone firm…”

Now, let’s examine that!

While getting out of a deal after the deal has gone firm isn’t necessarily easy, it can potentially be done if an inspection turns up a major problem.

Wow, this is so dangerous!

To write an article with this?

To allow the public to believe they can get out of a firm deal, after doing an inspection, for a property they bought unconditionally?

Nope.  Won’t happen.  Not a chance.

What could happen is the buyer could refuse to close, the deposit would be held in trust for two years, and when the case goes to court, the buyer will lose.

This is what I meant at the onset about online sources being terribly misinformed.  And this is in an article by the Canadian Press!

This is dangerous, dangerous advice.

And yet the internet will be littered with opinions on home inspections and everything in between.  Heck, somebody reading this right now thinks my opinion is nonsense.

“This stupid real estate sales schmuck and blogger is just trying to screw buyers and inflate the value of real estate…”

I had a listing in the west end two weeks ago for which I provided a pre-inspection by Carson Dunlop.  We had over 50 showings booked.  12 agents requested a copy of the home inspection.  And one agent did her own pre-inspection with a buyer.  That’s right: they either didn’t trust the Carson Dunlop inspection or felt they had a contact or an inspector that they felt more comfortable with.

Use the pre-inspection if one is provided.

Do your own pre-inspection if you so choose.

But understand what an inspection is and what it isn’t.

Otherwise, when your roof leaks in three years, you’ll be the guy expecting somebody else to write you a cheque to cover the damage…