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August 9, 2006 "Strong real estate market hurting home inspectors ” By Johnnie Bachusky/Red Deer Express Local home inspectors are seeing revenues drop this year by up to 40% because of the over-heated real estate market. Many buyers - desperate to purchase a home - are opting not to insist on a home inspection clause in the purchase agreement for fear of losing the house. The frenzied competition for homes in the Red Deer market is resulting in an ever increasing amount of home sales without inspections, which are not mandatory in Alberta under any law or industry guideline. Sellers are often receiving multiple offers for a home and can afford to demand buyers waive the condition for a home inspection. Margaret Anderson, owner of Century 21 Advantage, said normally in the past one of every three or four house deals would be subject to a home inspection for a sale but now they are only conditional on financing. The waiving of home inspections is a growing scenario that is alarming industry officials. "It is a very dangerous situation in this market," said Arnold (Rich) Ritchie, owner of Argood Home Inspections. "There is so much product being moved that normally wouldn't be because it is not the highest quality. "People are just going in and bidding the price up," added Ritchie. "And then there are maintenance issues." Doug MacDonald, owner of Pillar to Post Professional Home Inspection, said the slump in revenue for his business is about 30% to 40% lower this year then in 2005. MacDonald said it is because of the fierce competition between buyers eager to get a home in the Red Deer market. "We are not being hit as hard as the Edmonton market because of the surrounding (rural) areas but in the city itself it is a different story," said MacDonald, whose company has been in business in Red Deer for the past 11 years. "They (buyers) have had to go with unconditional sales or else they weren't going to get the house." He said a year ago between 50% and 60% of houses had offers with home inspections included in the sale agreements. But in May and June of this year, MacDonald said he would be "surprised" if the percentage was at 30%. "I have never seen a market like this. It is a new phenomenon," said MacDonald. He also agrees with Ritchie that buyers are putting themselves in a dangerous position without a home inspection, a situation that could lead to tens of thousands of dollars of maintenance costs that could have been avoided. MacDonald said he recently did one home inspection, which can cost between $300 and $500, after a sale agreement was signed and it was discovered the basement needed an overhaul. The buyer is now looking at major costs for a foundation replacement. "They (buyers) are allowing money to dictate what decisions they should make," said Bert Bruinsma, owner of Home-Alyze Inspection Services. "They (buyers) are so desperate, saying, 'It doesn't really look so bad'. But it is. The buyer may be taking serious risks." Bruinsma said he finished one home inspection last week where a buyer - after the sale agreement was signed - learned it will now cost him $30,000 to repair the roof. The buyer is now trying to renegotiate the sales agreement, a potentially messy legal scenario. However, home inspectors are relieved somewhat by the fact the real estate market has slowed in July. There are now more listings in the Red Deer market, giving desperate buyers more breathing room to get a home inspection. However, no matter what type of market there is, Anderson's Century 21 office is recommending its clients insist on a home inspection) for their satisfaction. "It is always better peace of mind and then you know what you are dealing with in a new house," said Anderson. "People need to be aware of the risks that exist."
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