The hot seller’s market in Ontario, according to home inspectors, is preventing most buyers from getting inspections, which is forcing a large number of inspectors to leave the industry due to dwindling business. According to them, the situation is putting home buyers in jeopardy.
After selling their home in Kitchener, Ont., last spring and attempting to buy in Brantford, Magdalena Bisson and her husband found themselves in that situation.
They were finally successful after losing several bids. However, like most homes for sale, the offer had to be unconditional, meaning there were no conditions attached to the sale, such as an appraisal, financing, or a home inspection.
While some sellers provide a pre-inspection report to potential buyers, Bisson did not receive one.
Following their move in — and two floods — the couple discovered the house needed extensive work, including excavation around the house, basement drywall repair, and insulation, which Bisson estimates will cost more than $50,000.
According to Ontario home inspectors, the seller’s market and routine unconditional offers are resulting in fewer inspections, leaving buyers in the dark or forcing them to settle for “walk-through” inspections that are less thorough and do not meet association standards. Inspectors say enacting stalled provincial legislation would help protect consumers and regulate the industry.
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According to the Canadian Real Estate Association, the average sale price in December 2021 in Ontario was $922,735, up 23% from the previous year.
Panos Loucaides, a GTA home inspector, says he’s seeing more people get inspections after they’ve already made the largest purchase of their lives.
The problem isn’t limited to the Greater Toronto Area. Bradley Labute, a home inspector in Windsor-Essex County, says that about half of the inspections he performs now are after a house is sold, which was almost never the case before the housing market exploded in 2018.
According to Labute, roughly a quarter of the houses he inspects after a sale now have “major problems.”
The house flooded six months after Bisson and her husband moved in. They hired a contractor to fix it, but it flooded once more.
They hired a home inspector, who discovered a number of issues, including new work that wasn’t up to code, a lack of proper drainage, flooding-prone landscaping and grading, and signs of previous water damage.
Inspectors leaving industry, association says
Based on information from his members, Len Inkster, a home inspector and executive secretary of the Ontario Association of Certified Home Inspectors (OntarioACHI), estimates that only about 15% of sales in Ontario now include a home inspection.
According to Inkster, sellers who offer pre-inspection reports to buyers are more common in certain price ranges and regions, such as Toronto, but not everyone does.
There was no information available on how common home inspections used to be in Ontario. According to CBC Toronto, several federal, provincial, and regional real estate organizations do not keep track of how many sales include home inspections.
John Hope, the broker of record for ReMax Eastern Realty in Peterborough, Ont., isn’t surprised by the 15% estimate. Even those buyers who do get to see a pre-inspection report, he claims, aren’t given enough time to act on it.
Experts warn that investors now account for more than 25% of Ontario homebuyers, driving up prices.
In 2021, the House Price Index increased by 26 percent, the fastest rate on record.
According to Inkster, the number of inspectors in Ontario has decreased by about 60% since 2017. He claims that voluntary membership in OntarioACHI has steadily declined over the years, from 827 members in 2017 to just 80 in 2022.
Dianne Guzik’s business had plummeted to the point where she was forced to leave the industry in November after 14 years as a Millbrook, Ont., inspector. She claims that realtors who used to call her for inspections stopped doing so, and her insurance premiums increased.
Buyers who are content with ‘walk-through’ inspections
Loucaides, the owner of Inspection Services Group, claims that his company took the biggest hit last year; he started the year with five inspectors and is now down to two part-time employees.
He claims he was attempting to work within the fast-paced housing market by dispatching a group of his company’s inspectors to a house at the same time to accommodate a buyer during a viewing. However, many viewings were only 15 to 30 minutes long, and Loucaides claims he can’t do a good job in that amount of time. He’s also a member of an organization that holds his inspectors to a higher standard.
Even the pre-listing inspections ordered by sellers to provide to potential buyers began to dry up, according to Loucaides.
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Instead, some buyers are paying for “walk-throughs,” which are rushed inspections performed during a house viewing.
“You can’t tell someone the condition of a property without spending at least two and a half hours in the house,” Inkster said.
The Real Estate Council of Ontario (RECO) advises buyers to get a home inspection, but does not recommend a particular company.
Inspectors call for regulations to standardize industry, enhance public trust
Inspectors are calling for regulations to standardize the industry and boost public confidence.
The ruling Liberals passed Bill 59 in 2017 to regulate the home inspection industry in Ontario, requiring inspectors to be licensed, insured, and adhere to a code of ethics.
Despite support from the industry, including the Ontario Association of Home Inspectors, the Progressive Conservatives have not passed it (OAHI).
While the bill does not require inspections or remove the pressure on buyers to move quickly, industry insiders believe that if inspectors were regulated, realtors, appraisers, and the general public would rely on them more to help protect consumers.
A spokesperson for Ontario’s government and consumer affairs ministry says the province is “continuing to review this file to determine next steps” when asked why Bill 59 hasn’t been enacted.