By Nancy O’Dea:
The real estate market in Ottawa continues to be a seller’s market, which means the inventory levels remain low and prices are continuing to climb. Things are changing daily in the world, which in turn influences the market. The current equation, however, makes it very challenging for buyers, who are feeling pressured to get into the market and become more willing to take risks because of this pressure.
There was a time that, as a realtor, I would never advise clients to buy a home without an inspection, and I do believe it is risky. So how do we mitigate the risk, and what obligations does a seller have at the time of listing?
I encourage our listing clients to have a pre-sale house inspection. Some dismiss this immediately as unnecessary, but Frank and I believe in the adage that “Knowledge is power.” When you are trying to get maximum dollar for your asset, you want it to present it with its best foot forward. Doing an inspection before it goes to the market allows a seller to remedy any deficiency or disclose the deficiency and factor it into the pricing. This inspection report may be shared with any prospective buyers.
Sometimes, rather than repairing a deficiency, we will have professionals provide a quote for the repair with a guaranteed price for 90 days. The seller having an inspection gives the selling team the assurance that we know what we are selling, and if a buyer does want to do their own inspection, there will be no surprises for the seller at completion. It is often after an inspection that surprises are discovered, and a seller becomes vulnerable with a possible renegotiation from the buyer. If we have to scramble to get outside professionals to give information about what those remedies may cost, and often at a time when time is of the essence, a seller can be pressured to renegotiate with minimal understanding of the issue.
A seller cannot knowingly sell a property with defects and not disclose the pertinent facts to potential buyers without impunity or liability. The seller must always be forthcoming when listing a property and disclose any defect that would preclude a reasonable buyer from coming forward with an offer or risk liability thereafter. There is the notion of “buyer beware”, and a buyer cannot be refused the opportunity to have an inspection; so, when given the chance, and if it would not jeopardize your offer, it is a good opportunity to take for a buyer.
However, in the world of multiple offers, the inspection often does not take place, and buyers are finding out too late things that a seller should have disclosed at the time of listing or at the point of sale if they had been aware of it. There is a two-year moratorium after a sale that a seller may be at risk with an unhappy buyer for pertinent details that they were aware of and did not disclose. When this happens, buyers should make documentation with their lawyer at the first available opportunity.
It is vital in these frenzied days that buyers do as much due diligence as possible on properties and neighbourhoods. If there are things that are very important and would influence you as a buyer, you should voice these things upfront with your realtor while searching for the right house. Investigating neighbourhood idiosyncrasies is always wise. Talk to neighbours, as they are often the best resource.
As we move into April, inventory levels may be on the rise since the March break, and only time will tell how slowly increasing interest rates and global issues will influence our market. In the meantime, it is advisable while working closely with your realtor to do your own due diligence on important issues such as schools and other influencing factors.
I believe that the majority of people in these transactions are acting in good faith, but it does not take the place of all parties practicing good due diligence.
Nancy O’Dea is a sales representative and private-office advisor of Engel & Völkers Ottawa