Pre-Listing Home Inspection (?)

[nerase]

A property that I am interested in has apparently been inspected already (at the request of the seller) by an inspection company (selected by the seller). The inspection company is carson-dunlop. The property is a single family home.

I currently live in a condominium townhome (it was new when I bought it), so I'm ignorant as to what to look for in a reputable home inspection company. I've never had to deal with one before. If we put an offer in on this place, do you think we need to pay for another home inspection? Or is it enough that the property has already been inspected? Can we trust an inspection report filed by a company that has been selected by the seller? Should we?

The property is an older home, so it is important that we know it has good bones, before tabling an offer.

I checked the BBB website, and carson-dunlop is not a BBB accredited business. Although they have been given a "B" rating by the BBB. They have only been on-file with the BBB since September 2004, but apparently they have been in business since 1978, according to their website. Only one complaint has been registered, and it was resolved to the satisfaction of the complainant.

Here is the bbb info regarding the one complaint:
Type: "Refund/exchange issues: Failure to honor refund, exchange or credit policies"
Result: "Company resolved the complaint issues. The consumer acknowledged acceptance to BBB."

What should I make of all of this??

 

[Ric]

A property that I am interested in has apparently been inspected already (at the request of the seller) by an inspection company (selected by the seller). The inspection company is carson-dunlop. The property is a single family home.

I currently live in a condominium townhome (it was new when I bought it), so I'm ignorant as to what to look for in a reputable home inspection company. I've never had to deal with one before. If we put an offer in on this place, do you think we need to pay for another home inspection? Or is it enough that the property has already been inspected? Can we trust an inspection report filed by a company that has been selected by the seller? Should we?

The property is an older home, so it is important that we know it has good bones, before tabling an offer.

I checked the BBB website, and carson-dunlop is not a BBB accredited business. Although they have been given a "B" rating by the BBB. They have only been on-file with the BBB since September 2004, but apparently they have been in business since 1978, according to their website. Only one complaint has been registered, and it was resolved to the satisfaction of the complainant.

Here is the bbb info regarding the one complaint:
Type: "Refund/exchange issues: Failure to honor refund, exchange or credit policies"
Result: "Company resolved the complaint issues. The consumer acknowledged acceptance to BBB."

What should I make of all of this??

Nerase,

It's best that you have your own Inspection done, independent of what the seller is providing. I would definately advice you to place an inspection clause in your purchase agreement. Always cover your butt.

 

[syndicate]

I agree with Ric, it's better to put the clause in regardless if you need it or not. You might end up wanting one done prior to closing so you wont have regrets.

 

[nerase]

Thanks to you both for your advice.

 

[AnnetteMeetsJane]

We used this company for our home inspection (we were buyers). The report wasn't worth the paper it was written on. They employ a bunch of inspectors who work on contract, and the guy we had was seriously inexperienced. The estimates for work needed were seriously underestimated and he missed some real obvious stuff. In retrospect, I think that I was more aware of potential issues than he was. I wouldn't use them again.
The trick is that you need an inspector with a lot of experience with older homes. Don't use one suggested by your real estate agent - they have kick-back relationships as your agent want the sale to go through.
-AmJ

 

[Ric]

We used this company for our home inspection (we were buyers). The report wasn't worth the paper it was written on. They employ a bunch of inspectors who work on contract, and the guy we had was seriously inexperienced. The estimates for work needed were seriously underestimated and he missed some real obvious stuff. In retrospect, I think that I was more aware of potential issues than he was. I wouldn't use them again.
The trick is that you need an inspector with a lot of experience with older homes. Don't use one suggested by your real estate agent - they have kick-back relationships as your agent want the sale to go through.
-AmJ

If your real estate agent has a "kick-back relationship" with an inspector (lawyer, mortgage broker, relocation company etc) then he/she should disclose this to the buyer/seller. It's against code of ethics to not disclose this. Also, he/she should provide you with at least 3 choices and have you make the final decision on which one to go with.

 

[Eug]

We used this company for our home inspection (we were buyers). The report wasn't worth the paper it was written on. They employ a bunch of inspectors who work on contract, and the guy we had was seriously inexperienced. The estimates for work needed were seriously underestimated and he missed some real obvious stuff. In retrospect, I think that I was more aware of potential issues than he was. I wouldn't use them again.
The trick is that you need an inspector with a lot of experience with older homes. Don't use one suggested by your real estate agent - they have kick-back relationships as your agent want the sale to go through.
-AmJ

My inspector was also Carson Dunlop and it was quite good. He spent a few hours in the home, and pointed out several deficiencies. However, he had been in the business for a dozen years or so, and the house was a more recent (re-)build.

 

[nerase]

Unfortunately, it seems as though this thread I initiated was for naught. I doubt we'll have to worry about arranging an inspection. There were EIGHT offers on the table. And it's not like this house was the Taj Mahal or something! It is a small, modest home in need of repairs! Our bid will most likely end up in the garbage bin (and it was definitely NOT a stink bid, either).

Ironically enough, there was an article in the Star today about this same issue: http://www.thestar.com/comment/columnists/article/471989

 

[Ric]

Unfortunately, it seems as though this thread I initiated was for naught. I doubt we'll have to worry about arranging an inspection. There were EIGHT offers on the table. And it's not like this house was the Taj Mahal or something! It is a small, modest home in need of repairs! Our bid will most likely end up in the garbage bin (and it was definitely NOT a stink bid, either).

This has become the norm in todays market. I try and advice my clients to stay clear of these bidding wars. Unfortunatelely, not everyone will listen.

 

[Eug]

I stayed clear of one bidding war when I was looking, but only because that bidding war was over the top. The predicted offers were 10% over asking, and I thought asking price was around fair market value. (I could sort of see it for that particular house though. Although size and build wasn't necessarily the greatest for the price, it was a very unique design, and I could understand if some Torontonians would pay a premium just for uniqueness. I wasn't one of them though, at least if the premium meant more than 10% over.)

OTOH, I've seen homes go in bidding wars close to what I think is a fair market price, or maybe just a couple of percent over. Would you want your clients to avoid those completely too?

In my case, I actually paid well under asking for my home, but that's because the seller listed it too high, and thus got no offers at all.

 

[nerase]

Well, I just heard back from the sellers agent...

The house sold for 52, 000 over asking. No conditions.

Needless to say, we didn't "win" this one. I don't know why people can't simply list a house at its actual price! If I knew, I wouldn't have bothered!
What a waste of everyone's time and energy! We weren't even remotely close to the top bid -- and we offered 3% over asking! I feel very bitter about this. It seems like we will never be able to afford a house
in this city. Even a small, simple, aged one with an old kitchen, a damp basement and no garage.

My husband is taking this very hard, he had to go for a walk after we found out. He thought we had a pretty good chance at it (as did I ... boy were we WRONG). What a joke.

We are living in a tiny condo (bought new) so this is our first real visit to what I will now refer to as "the circus"

I feel so angry and used.

ETA: We did not realize that this was an orchestrated bidding war triggered by a deceptively low listing price. when we offered our bid. We placed ours early, and at that point there was only one other offer. We were shocked to see how quickly the situation changed.

 

[Ric]

OTOH, I've seen homes go in bidding wars close to what I think is a fair market price, or maybe just a couple of percent over. Would you want your clients to avoid those completely too?

Fair market price - The price that an interested but not desperate buyer would be willing to pay and an interested but not desperate seller would be willing to accept on the open market assuming a reasonable period of time for an agreement to arise .

Here is my issue. As agents, we all come to the table with very good idea of what fair market value is based on a comparative market analysis (CMA). The "new variable" of now trying to guess what the other bidders will pay "above fair market value" and trying to out bid them is crazy and will / is hurting the market. There is no way you should be bidding over 5% above MV.

My 2 cents...

 

[Eug]

Well, I just heard back from the sellers agent...

The house sold for 52, 000 over asking. No conditions.

Needless to say, we didn't "win" this one. I don't know why people can't simply list a house at its actual price! If I knew, I wouldn't have bothered!

Because there is no "actual" price.

Anyways you guys are taking this WAY too personally. Also, if your real estate agent didn't give you fair warning about the potential price issues, then you might want to have a talk with him. However, by the same token, you shouldn't get overly wrapped up in these bidding wars either.

Fair market price - The price that an interested but not desperate buyer would be willing to pay and an interested but not desperate seller would be willing to accept on the open market assuming a reasonable period of time for an agreement to arise .

Here is my issue. As agents, we all come to the table with very good idea of what fair market value is based on a comparative market analysis (CMA). The "new variable" of now trying to guess what the other bidders will pay "above fair market value" and trying to out bid them is crazy and will / is hurting the market. There is no way you should be bidding over 5% above MV.

My 2 cents...

I agree. However, I see nothing wrong with bidding a couple of percent over fair MV if you really like the place. If you don't get it, you don't get it.

When I sold my condo, I listed it at maybe 1-2% under what i considered fair MV. I only got two offers (despite 40+ viewings). One was for 1-2% below asking, and one was for 7% over. Had the latter offer not been there, I would have considered the former offer, or at least negotiated. However, if that person didn't bid, he wouldn't have even been a consideration obviously.

 

[Ric]

I agree. However, I see nothing wrong with bidding a couple of percent over fair MV if you really like the place. If you don't get it, you don't get it.

When I sold my condo, I listed it at maybe 1-2% under what i considered fair MV. I only got two offers (despite 40+ viewings). One was for 1-2% below asking, and one was for 7% over. Had the latter offer not been there, I would have considered the former offer, or at least negotiated. However, if that person didn't bid, he wouldn't have even been a consideration obviously.

Bidding wars are becoming the norm rather than the exception. Every Tom , Dick and Harry is holding offers until 5pm Tuesday. If your a seller, unless you are stting on the cash you made from selling your house you have not really made any money because the next property you're buying was also inflated from another bidding war (chances are you're even worst off as you would normally be trading up). So, since salaries aren't going up by 10%/yr, mortgage rates are most likely at bottom and likely will trend up. The average person will soon not be able to qualify due to a higher GDS (Gross Dept Sevice ratio)>>>less demand>>>lower prices. Now, that person who just paid 10% above "fair market value" is now 20% in the hole (another 10% transaction cost to dispose of property). It doesn't take a rocket scientist to see whats coming. And please, I'm an optimist so don't crucify me. I just think people are getting swept up in this frenzy of "I must buy now cause rates are low" without seeing the bigger pic.

2 cents more....

 

[Eug]

Bidding wars are becoming the norm rather than the exception. Every Tom , Dick and Harry is holding offers until 5pm Tuesday. If your a seller, unless you are stting on the cash you made from selling your house you have not really made any money because the next property you're buying was also inflated from another bidding war (chances are you're even worst off as you would normally be trading up). So, since salaries aren't going up by 10%/yr, mortgage rates are most likely at bottom and likely will trend up. The average person will soon not be able to qualify due to a higher GDS (Gross Dept Sevice ratio)>>>less demand>>>lower prices. Now, that person who just paid 10% above "fair market value" is now 20% in the hole (another 10% transaction cost to dispose of property). It doesn't take a rocket scientist to see whats coming. And please, I'm an optimist so don't crucify me. I just think people are getting swept up in this frenzy of "I must buy now cause rates are low" without seeing the bigger pic.

Perhaps for many people, but many others actually have the cash to buy with significant equity right off the bat. This is esp. true with upgraders, who have significant equity in their condos when they want to move out to semis or whatever.

Like I said, if FMV is say $300000, I see nothing wrong with bidding $304000 if you really like the place, to have as your primary home. And if you don't have the winning bid, then c'est la vie. Or even bid $300000. At least with that you'd have a chance, rather than with bidding nothing.

As you said, bidding wars are now more the rule than the exception, and in that environment if you completely ignore bidding war scenarios you won't even be in the running for most of the homes out there for sale.

BTW, I just checked the Toronto Real Estate board statistics. The average % of list for all of 2009 Toronto home sales was 99% for the central district, 98% for the west district, and 98% for the east district. For the month of December, it was 100, 98, and 99 respectively. So, despite all the bidding wars, the overall average sale prices in Toronto in 2009 were actually below asking.