Why Is a Pre-Offer Home Inspection a Good Idea?

In busy, tilted market conditions, when there are far more buyers than sellers, many purchasers find themselves in multiple offer situations. In these situations, anything a purchaser can do to help make their offer more attractive will increase their odds of being the buyer that gets the house. One of the things that can be done to help make the offer more attractive is to go in with a "clean" offer. While removing a home inspection condition from the offer may appeal to the home's vendor, it may not be in the purchaser's best interest. So, what do you do? You want the house, you want the inspection, but adding the inspection as a condition of the offer can seriously reduce it's attractiveness to the vendor. There is a solution that can be a win win for both the home buyer and the home seller. The solution is a Pre-Offer Inspection.

A Pre-Offer inspection is the same inspection, only done before the offer is registered. It involves getting the vendor's permission to enter the home for the purpose of the inspection prior to the time offers are being accepted. Vendors are usually willing to provide this access because they know if the inspection is done pre-offer, it increases the likelihood that the offer will come in clean (no conditions). For the purchaser who has done a pre-offer inspection, they can feel confident submitting a clean offer of purchase and sale. The purchaser will have the information from the inspection when drafting their offer. This can give a purchaser a better understanding of what concerns or expenses may need to be considered. If the inspection uncovers little in the way of concerns, the purchaser may be comfortable making their offer more aggressive with relation to price, which will also increase its attractiveness to the vendor.

In conclusion, the question is no longer to do, or not do, the home inspection, but rather, when to do it.

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What Are The Issues With Oil Tanks?

The issues with oil tanks are both environmental and insurance/delivery related. For non underground oil tanks above 15 � 20 years of age, insurance companies are encouraging their replacements either by requesting very high insurance premiums or refusing to insure the home as long as the old tank is present. The reason is that the insurance companies have concerns about the older tanks leaking and the costs associated with an environmental cleanup.

The environmental concern is that if an oil tank (indoor, outdoor or underground) leaks, it can produce a very expensive cleanup problem. The worst residential case we are aware of in Ontario was in the Belleville area and the cost for that cleanup has exceeded one million dollars! Fuel oil suppliers are now required to inspect tanks before filling them. If this inspection finds the tank to be unsatisfactory in any way, the fuel delivery person is prohibited from filling the tank. This is based on TSSA regulations enacted in June of 2001. For more information on TSSA regulations, go to http://www.tssa.org/

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Where Can I get Contractor Pricing Information?

When a home is in need of repairs, renovations or even additions, the question that arises is usually �How much should I budget for this?�. With each of our inspections, clients will receive a copy of HomeReport, which contains a budgeting section to help answer this question. However, because this information in HomeReport is printed, it can become outdated with the passage of time. We have discovered a web site that you may find useful for budgeting purposes and we�ve found it offers costing information on a wide range of items. You can find the web site at www.ontariocontractors.com/costs.htm

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Have You Ever Dated a House?

I frequently get asked "How old is this house?". There are many ways (clues) that I use to help determine the age of a house, some of which are very simple.

In attempting to pin down the actual date of a house, it is important to be able to differentiate between an item that is original to the house and one that was installed at a later date. Two of the simpler and more readily accessible clues are thermal windows & toilet tanks. Thermal windows with aluminum framing between the panes will commonly have the year of production printed or stamped into this frame. This can be used quite accurately. Toilet tanks and/or their lids will commonly have the actual casting date (i.e. 02 12 66 for Feb. 12, 1966) impressed into the porcelain. This impression is made on the inside of the tank and/or lid. You will need to remove the lid of the toilet tank in order to see it. Both window and toilet dates may precede the actual completion date of the home by perhaps as much as one year. For example, if the windows date to 1980, this suggests that the home was likely completed no later than 1981.
Gas furnaces offer options to aid in dating a house. First, a gas fitter's tag is commonly attached to the gas line at the furnace. It usually supplies an exact date (day, month, year) of the pressure test which is done at the time of the original gas installation. Again, this only works for dating the house if the gas furnace is original. Since this test must be done with each new installation, you can use this method to help determine the age of a newer furnace. Second, the gas inspection authority (i.e. Consumer's Gas) will usually place an inspection sticker directly on the body of the furnace. Like a gas fitter's tag, it will usually supply an exact date. Some other dating suggestions are offered to the right:
  • Knob & Tube Wiring - pre 1950
  • Stone Foundation Walls - pre 1930
  • Brick Foundation Walls - pre 1935
  • Metal Chimneys - post 1960
  • Copper Drainage Pipes - 1955-1970
  • Drywall Interior Finish - post 1960

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Are There Insurance Issues With a 60 AMP Service?

The answer is YES. Insurance companies are quoting homes with 60 amp electrical services in a �high risk� category. There may be no concerns with the service from an inspection viewpoint, but unsuspecting purchasers are getting hit with quotes for 60 amp homes that are about twice the going rate for a similar home with a100 amp service.

In the past, it has been our policy to advise clients that they may find themselves with insurance issues if the home has knob and tube wiring and/or galvanized plumbing in the home. We have even advised clients that 60 amp services were becoming an insurance issue, especially with the larger homes that may now have two or three apartments in them.

What we have recently become aware of is that any home with 60 amp service will be quoted as high risk. We had a client from North York call us recently to advise us that she was not having any success in getting reasonable quotes for her 1100 square foot, 40 year old raised bungalow. We had suggested that she may want to upgrade to 100 amp service as a useful upgrade. We told her that we would shop it around for her, confident that there was simply a miscommunication. To our surprise, all seven of the companies that we called, without exception, proposed a high risk pool for this home! The rates quoted were approximately double the going rates. This home was being quoted in the $625.00 to $690.00 range. The same home with 100 amp service was being quoted in the $325.00 to $380.00 range.

When doing the inspection, we estimated the cost of upgrading the electrical service to 100 amps at approximately $1,000. (We always recommend a 32 circuit panel, not a 24 circuit panel) Our client�s best quote was for $750.00. She has gone ahead with the upgrade. As you can see from the numbers, it will only take a couple of years to have the lower insurance premiums cover the cost of the upgrade.

As I stated earlier, I may not agree with this definition of �high risk�, as a Registered Home Inspector, but this is the reality many purchasers face when shopping for insurance. I hope this information will help you and/or your clients avoid any unpleasant surprises related to homes with 60 amp electrical services.

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What Are The New Insurance Issues Homeowners Are Facing When Buying a Resale Home?

The new rules, regulations, and numerous restrictions that insurance companies have written and rewritten since Sept. 11, 2001 continue to surprise us. Homeowners that have never had a problem insuring their homes are suddenly faced with unbelievably high premiums or facing the reality of no insurance at all. In the case of no insurance, these homeowners are being asked to make changes (in some cases changes that are costly upgrades), in order to make the home "insurable". I may not agree with the definitions of "high risk" as a Registered Home Inspector, but this is the reality many purchasers face when shopping for insurance. It is also my understanding that some real estate agents are adding insurance clauses into the offer of purchase and sale to help protect their clients.

Some companies will still offer a "high risk" category for homeowners who are either unwilling or unable to comply with the required upgrades, but these companies are getting harder and harder to find and the "high risk" premiums are usually two to three times higher than they are for a similar home where the upgrades have been done.

Insurance companies today are finding themselves in tough market conditions. In situations where they are not making money in the markets, the income they make from premiums is that much more important. Individual brokers are forced to be very careful not to write too many of these "high risk" categories as they need to ensure their "loss" ratio stays at a reasonable percentage. If a broker's loss ratio rises too much, the company writing the insurance will cut the broker off. It is for this very reason that brokers are reluctant to take on too many new clients in a high risk category.

I'd like to address some of the common culprits that are being flagged by insurance companies as the high risk items. By sharing this information with you. I hope that together we can help protect home buyers and home sellers from being side swiped by these new realities.
Knob & Tube Wiring: Was installed in homes that where built before 1950. The Electrical Safety Authority (ESA) does not have a problem with Knob & Tube as a category of wiring, they only suggest it be reviewed on a case by case bases. Insurance companies seem to take the simple view that Knob & Tube = Bad.

Aluminum Wiring: Was installed in homes that where built from the mid 1960's to the mid 1970's. Insurance companies attitudes seems to be getting more restrictive on aluminum wiring.

Electrical Services Less Than 100-Amps. In Size: These smaller services have been an insurance issue for a number of years. Most insurance companies require an upgrade to a 100 amp. service, even though, technically, there may be no need for such a service size. An example would be a small bungalow with no air conditioning, gas heating and appliances.

Galvanized Water Supply Piping: This category is very restrictive (insurance companies don't like paying for water leak damage). Galvanized pipes corrode from the inside out which makes them a higher leak risk.

Old and/or Buried Oil Tanks, and/or Buried Fuel Supply Lines: In addition to insurance issues, a homeowner may find that their supply of oil is suddenly cut off by the fuel delivery company as well. For a much greater understanding of the issues with older and buried oil tanks, please refer to our other FAQ on the subject entitled "What Are The Issues With Oil Tanks".

Wood Burning Stoves: Poorly maintained and/or improperly installed units can produce fire/safely concerns.

This is, by no means, a complete list but it does address some of the more common concerns. For even more information, you can check out the Insurance Bureau of Canada's web site at www.ibc.ca.

It was my intent when I started this FAQ to provide you with a list of brokers currently writing policies for these high risk categories. However, with a heightened awareness of their business practices, I am now suggesting that insurance shoppers start with their own insurance company or broker first. If this proves fruitless, I recommend that the insurance shopper contact a different broker and strongly encourage that broker to contact one of the following three insurance companies currently known to write these high risk policies. These companies will not accept phone calls directly from anyone other than an insurance agent or broker. The following is not a complete list of companies but it is a place to start.

1. South Western, 2. Ecclesiastical Insurance 3. Elliott's Special Risk

I hope this information will help both real estate agents and their clients to avoid any unpleasant surprises related to home insurance.

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How Do I Keep My Basement Dry?

The unusually heavy rainfall that we have seen lately has brought this question to the forefront. While nobody can guarantee that a basement will never leak, there are things that can be done to improve the odds of keeping it dry.

Once a homeowner is faced with water penetration, they often seek advice from contractors. Unfortunately, they are often advised that they need to spend thousands of dollars to dig up the yard to install new drainage tile and apply damp proofing. While this may be appropriate in some instances, it should be considered only as a last resort. Quite often, the problem of moisture penetration can be solved using simpler methods which cost a lot less.

In my experience, the best way to keep water out of the basement is to manage it so that it flows away from the house. This can usually be accomplished effectively by improving grading, extending downspouts, adding window wells and/or covers and trimming or reducing the greenery/gardens that may be close to the house.

1. Grading: Lot grading is an important aspect of the water management around the home. Properly done, it can have an enormous positive impact on basement dampness concerns. When reviewing lot grading, emphasis should be placed on a six foot perimeter surrounding the home. This area should be sloping down and away from the home to help direct water away from the structure.

2. Extending Downspouts: Downspouts should discharge at least six feet away from the home to help relieve water pressures near the foundation. Consideration must be given to avoid creating trip hazards. While mentioning downspouts, it is important to note that in order to offer effective water management, downspouts and eavestroughs must be kept secure and clear of debris.

3. Adding Window Wells and/or Covers: Basement windows that are close to, or at, grade present a moisture penetration vulnerability. Installation of a window well with a clear plastic window well cover can be quite helpful in reducing this vulnerability. For window wells currently without covers, adding an appropriate cover can help reduce the snow/water/debris accumulation in the window well.

4. Trimming or Reducing Greenery/Gardens: When greenery (trees, shrubs, vines etc.) or gardens are in close proximity to the foundation, they can effectively reduce air flow and evaporation of moisture in this area. They should be pruned at least twelve inches away from the house to allow wind to assist in the evaporation process. Also, when a garden placed up against the house is watered, so is the foundation.

One of the most common foundation materials is poured concrete. This type of foundation commonly develops hairline cracks which may allow moisture penetration. Should a hairline crack actually leak, the homeowner should consider having a resin injection done on the crack. The cost is approximately $350.00 (plus GST) and usually comes with a ten to fifteen year warranty. This can be a much simpler and less expensive solution than digging up the yard, which is commonly the first suggestion offered by the contractor.

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What Do I Think About UFFI?

Urea Formaldehyde Foam Insulation - UFFI is a retrofit that was used in numbers homes in Canada between 1977 - 1980, primarily under the incentive of the Canadian Home Insulation Program (CHIP) and was banned due to public perceptions about health risks.

It appears the only problem with UFFI is the lingering public perception and how that may depress a property's value. After eight years of litigation, which went all the way to the Quebec Supreme Court, the judgement rendered by the court, not only did not find in favour of the plaintiffs, but in fact obliged the plaintiffs to pay the defendants legal costs.

UFFI is actually a very good insulation! It fell victim to public hysteria fuelled by baseless media stories. The only time UFFI was considered to be an irritant was in the days immediately following a poorly done installation. The concern was formaldehyde gas which could be emitted in above average concentrations and irritate those people who had respiratory sensitivities. Today, you can find higher formaldehyde gas readings in a house with newly installed carpet than you would have found in a house with UFFI two weeks after the UFFI was installed.

Suffice it to say, my opinion on UFFI is that there is no concern about it. I would personally have no reservations about living in a home with UFFI and I would strongly suggest that the real estate boards and mortgage lenders drop UFFI clauses or penalties from their paperwork. END OF STORY!

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