Frank Steinhausen, Broker
FSteinhausen@REMAX.net
RE/MAX Rouge River Realty Ltd., Brokerage
Phone 905-428-6533
Fax 905-668-1850
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Archive for April, 2010
The Limitations of a Home Inspection
April 22nd, 2010 Categories: Buying real estate, Home Inspection
The Home Inspection Defined
A general home inspection is a visual inspection for system and major accessible component defects and safety issues. The inspection is not technically exhaustive. A “general home inspection” and a “home inspection” are the same thing.
A home inspection is designed to reflect, as accurately as possible, the visible condition of the home at the time of the inspection. Conditions at a home for sale can change radically in only a day or two, so a home inspection is not meant to guarantee what condition a home will be in when the transaction closes. It’s not uncommon for conditions to change between the time of the inspection and the closing date.
Above: an overloaded outlet with no cover
It’s a Visual Inspection
A “visual” inspection means that a home inspection report is limited to describing conditions in those parts of a home that an inspector can see during the inspection. Obviously, parts of the home that are permanently hidden by wall, ceiling and floor coverings are excluded, but so are parts of the home that were inaccessible during the inspection for some other reason. Some reasons might include lack of an access point, such as a door or hatch, or a locked access point, or because an occupant’s belongings blocked access, or because of dangerous or unsanitary conditions.
There can be many more reasons. The point is that if an inspector can’t see a portion of the home, the inspector can’t assume responsibility for ensuring that a safe and proper condition exists or that systems are operating properly in that hidden space.
Safety
Safety can be a matter of perception. Some conditions, such as exposed electrical wiring, are obviously unsafe. Other conditions, such as the presence of mold, aren’t as clear-cut.
In the example of the possible existence of mold, it’s difficult to accurately call it out during a general home inspection because mold sometimes grows in places where it can’t be readily seen, such as inside walls, making its discovery beyond the scope of the inspection. Also, the dangers to human health are from the inhalation of spores from indoor air.
Most people with healthy immune systems have little or no problem with inhaling spores. A few people whose immune systems are compromised by lung disease, asthma or allergies can develop serious or even fatal fungal infections from mold spore levels that wouldn’t affect most people. Every home has mold and mold colonies can grow very quickly, given the right conditions. Mold can be a safety concern, but it often isn’t. The dangers represented by mold are a controversial subject. Other potential safety issues also fall into this category.
Above: the cutting torch and gutter system of roof drainage management
System Defects
Although the majority of the inspection is visual, the InterNACHI Standards of Practice do require inspectors to operate space and water heating equipment, and air-conditioning equipment, if it can be done without damaging the equipment.
Inspectors will also examine the major accessible components of certain systems as required by the Standards of Practice. Furnace air filters are one example.
A home inspection is not technically exhaustive, meaning that systems or components will not be disassembled as part of the inspection. For example, an inspector will not partially disassemble a furnace to more accurately check the condition of the heat exchanger. Inspectors typically disclaim heat exchangers.
Hazardous Materials
Asbestos, mold, lead, water purity, and other environmental issues or potential hazards typically require a specialist inspection, and may additionally require laboratory analysis.
Home Inspectors are Generalists
Home inspectors are not experts in every home system but are generalists trained to recognize evidence of potential problems in the different home systems and their major components. Inspectors need to know when a problem is serious enough to recommend a specialist inspection. Recommendations are often made for a qualified contractor, such as a plumber or electrician, and sometimes for a structural engineer.
Above: the result of subfloor movement
Inspector Qualifications
Very few home inspectors have been in the inspection industry for their entire working lives. According to an InterNACHI poll, about half the home inspectors have a background in the building trades. Those with a construction background started with a general idea of the systems and components that they might find installed, as well as how those systems age and fail.
This doesn’t mean that inspectors with a background in something other than the building trades are not qualified – only that they started in the inspection industry at a relative disadvantage. Building the skills and developing the judgment to consistently recognize and interpret evidence correctly and make appropriate recommendations are things that can be improved with practice and continuing education.
Above: improper electrical splice
Managing Expectations
Part of a home inspector’s job is to manage the expectations of their client. This is especially true when a client has never dealt with a home inspector before. Explaining the limitations of a home inspection to a client will help them develop realistic expectations concerning what to expect from a home inspection report, and what lies beyond the scope of the inspection.
When a home buyer is interviewing inspectors, the buyer should ask about how the inspector handles special safety concerns.
Disclaimers are portions of an inspection agreement or report in which an inspector notifies the client that the inspector will not accept the responsibility for confirming the condition of a portion of the home or of a particular system or component.
Creating realistic expectations in a client’s mind will help prevent misunderstandings and promote smooth real estate transactions.
Borrowed from International Association of Certified Home Inspectors
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New Mortgage Rules Apply Today
April 19th, 2010 Categories: Mortgage, Real Estate News
If you are involved in the real estate market, whether buying or selling, you might be aware that the Canadian government implemented its new qualification rules today for refinancing or buying a home. If you are considering purchasing a home, or refinancing, before the introduction of HST on July 1, you will need to consider the changes that might affect the amount of home that you can buy.
Here are the main changes to the mortgage rules:
- Qualifying
Borrowers must qualify for the five-year fixed term mortgage rate, no matter what product they are purchasing. It was previously based on the three year term. What it means to you is that you will need an extra $9,200 in annual income to qualify for the mortgage on a $337,000 home. - Refinancing
Homeowners can now only withdraw up to ninety percent of their equity. This is up from ninety-five percent. It might mean that some homeowners will have to put off other big purchases. On the plus side, the government is limiting the risk of negative equity homes–a fact of life in a declining value market (see the United States). - Speculation
Investors will be required to put twenty percent down on the purchase of a home that they are not going to live in. The purpose of this change is to reduce the number of speculators in the market.
Call me if you want to know how, or if, the mortgage changes affect you.
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Greater Toronto REALTORS® report Mid-April Resale Market Figures
April 16th, 2010 Categories: Ajax, Oshawa, Pickering, Pickering Village, Real Estate News, Whitby
TORONTO, April 16, 2010 – Greater Toronto REALTORS® reported 4,601 sales through the Multiple Listing Service® (MLS®) during the first two weeks of April.
This represented a 25 per cent increase compared to the 3,681 sales recorded during the same period in 2009. New listings increased by 48 per cent annually to 9,512.
“The fact that annual growth in new listings outstripped growth in sales suggests that the GTA existing home market is becoming better supplied,” said Toronto Real Estate Board President Tom Lebour. “Home owners are reacting to strong sales and price growth by listing their homes in greater numbers. They are confident they will receive offers in line with their asking price.”
The average price for April mid-month transactions was $430,271 – up 12 per cent compared to the average of $383,361 recorded during the first 14 days of April 2009.
“The average annual rate of price increase has declined and we are shortly going to see a return to sustainable single-digit rates of growth,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “As home buyers experience more choice in the marketplace, there will be less upward pressure on the average selling price in the GTA.”
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Record First Quarter Sales
April 7th, 2010 Categories: Ajax, Durham Region, Oshawa, Pickering, Pickering Village, Real Estate News
April 6, 2010 — Greater Toronto REALTORS® reported 10,430 sales through the Multiple Listing Service® (MLS®) in March, pushing total first quarter 2010 sales to 22,418 – the best result on record under the current Toronto Real Estate Board (TREB) boundaries. The average price for March transactions was $434,696. The average price for the first quarter was $427,948.“The strong rebound in the existing home market was one of the initial drivers of economic recovery,” said TREB President Tom Lebour. “While we don’t expect to see the same rates growth moving forward, GTA households will remain confident in ownership housing as a quality long-term investment, especially as economic recovery expands across all industries.”
The annual rate of growth for new listings continued to accelerate in March. The number of new listings grew by 42 per cent compared to March of 2009.
“The average home price in the GTA will continue to grow this year, but the pace will slow as we move through the spring,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “As growth in new listings starts to outstrip growth in sales, buyers will experience more choice, resulting in more sustainable single digit rates of average price growth.”
Median Price
In March, the median price was $370,000, from the $317,500 recorded during March of 2009.
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In The News
April 6th, 2010 Categories: Buying real estate, Real Estate News, Selling real estate
In Keeping Matters Current this morning, they highlighted that it matters what you read when it comes to understanding the real estate market.
I can’t present this any better:
Whenever a market is evolving rapidly, the most difficult thing to do is keep up with the changes. A home seller or a home buyer in today’s real estate market must make sure that they understand what is happening and why it is happening. They can then guarantee that they are making an informed decision in regard to what is best for themselves and their families.
The Goal
Keeping abreast of what is happening in today’s real estate market is no easy task. You may feel that you are doing a good job of staying on top of market fluctuations. You may read all the pertinent data and stories from all the best media sources. However, it is not just having the information but also being able to analyze the information that truly matters. And that is not easy.
The Challenge
Let’s look at two headlines from last week and a quote from each article:
Home Price Index Edges Up – Wall Street Journal 3/30/2010
The seasonally adjusted (prices) increased 0.3% in January from a month earlier, the eighth consecutive monthly increase. … The report “indicates that the worst of the declines are behind us and we can at least move forward from here,” said Adam York, an economist with Wells Fargo Securities.
Home Price Dip Extends to 4th Month – CNN Money 3/30/2010
After a five-month run-up in home prices starting last spring, prices have now fallen for four consecutive months … The market seems to have pulled the rug out from under housing industry hopes for a sustained early recovery.
I purposely left out to which report each article was referring in order to make a point. Each article was using as the foundation of their headline and story the SAME REPORT – the S&P/Case-Shiller Home Price Index of 20 cities.
So here we have the Wall Street Journal and CNN Money reporting on the same exact news but coming up with widely opposite conclusions. One used the month-over-month numbers and one used the year-over-year numbers. Will most people understand the nuances and be able to determine what they mean?
The Solution
In today’s market, whether you are buying or selling, you need a dedicated professional to help you analyze the preponderance of information available.
You need someone that is willing to take the time to understand what is happening and why it is happening. They must also be willing to sit down and simply and effectively explain what it means to you and your family.
As Dave Ramsey, the personal finance guru, said:
“When getting help with money, whether it is insurance, real estate or investments you should always look for someone with the heart of a teacher, not the heart of a salesman. About eighty five percent (85%) of the people in the financial world know how to sell and tell you what to do. They don’t know how to teach you what you are doing. Stay away from them.”
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