The B.C. government is being urged to impose a seven-day cooling off period to protect Lower Mainland home buyers who are increasingly forgoing home inspections in order to win bidding wars by making risky subject-free offers.
The Home Inspectors Association of B.C. estimates as few as 10 per cent of homes sold in Metro Vancouver and the Fraser Valley are now being inspected prior to sale, down from 75 per cent a year ago.
That translates into up to 30,000 Lower Mainland homes sold in the first five months of this year without an inspection.
“They are making subject-free offers without inspections out of fear of losing the house in a bidding war,” said Helene Barton, the association’s executive director. “This is putting them at great financial risk since most buyers’ funds are stretched to the limits after the purchase of a property, and would have little, if any, money left over to deal with significant repairs.”
The association argues the dangerous step of forgoing inspection is being driven not just by the highly competitive bidding but also the tight timelines, which often feature deadlines for offers of as little as two days after an open house.
A seven-day cooling off period is already in place for real estate pre-sales in B.C. and the association says it would give hasty buyers a chance to back out of a sale without penalty and potentially avoid financial ruin.
The association says many homes are selling subject-free that may have problems with the foundation, plumbing, wiring or roof, as well as environmental problems like asbestos, mould or buried oil tanks that may require costly removal or remediation.
The Real Estate Association of B.C. says it does not yet have a position on the proposal.
Bob de Wit, CEO of the Greater Vancouver Home Builders Association, supports a cooling off period.
“It’s a pretty good idea,” de Wit said. “In such a hot market and with such a rush to close deals, this is something that would really protect the home buyer.”
He said unexpected costs that surface after purchase often come at the cost of business for others in the industry, such as renovators if new buyers are forced to shelve plans to upgrade a kitchen.
“When you see these deals closing without [subjects] what it represents is hidden costs that adds stress to homeowners.”
De Wit cautioned that not all home inspectors are equally skilled in detecting problems.
“We’d like to see the home inspection industry continue to raise the bar for the minimum threshold that needs to be met to be called a home inspector.”