Home Inspection Articles

Bidding War Advice: Should You Waive Your Home Inspection?

Posted by Thea Scrimger on Apr 15, 2014 9:59:00 AM

HomeThe spring real estate market has begun, and as it heats up many home buyers are preparing to go to war. Bidding wars are not a new phenomenon – especially in Toronto - however the public’s willingness to participate in these wars is starting to shift. The Globe and Mail recently reported on a survey conducted by Pollara for BMO, which showed that “34 per cent of Canadians surveyed are willing to enter a bidding war when it’s time to buy a home, an increase of six points, or 21 per cent, from a year ago.”* These figures are even higher when you look exclusively at Toronto, where “the appetite for competitive bids among major cities is the highest in Toronto, at 44 per cent.”*

A bidding war is when more than one prospective home buyer puts in an offer on a property. Each buyer does not know what the others are presenting, and makes their offer based on a combination of what they believe the house is worth and what the other buyers may offer. You don’t want to bid too high and overpay, but you don’t want to bid too low and not get the house. In most instances, bidding wars drive the price of the home up, with many properties in the Greater Toronto Area closing for several thousand dollars more than the original asking price.

The Globe and Mail described the recent sale of a home in The Beaches neighbourhood which sparked a 12-way bidding war, causing the home to sell for $58,000 over the listing price - despite the fact that the property required several major upgrades.** Due to current market conditions, this is not an uncommon occurrence, and buyers should be prepared to encounter this type of situation. As Mark Weisleder explains, “Real estate markets in Toronto and Vancouver are still red hot with bidding wars driving up prices…One reason is that listings are in short supply.”*** It is easy for buyers to put themselves and their investment at risk by doing whatever they can to stay competitive in bidding wars. Consider the information below if you find yourself engaging in a bidding war.

HouseWhen buying a home in a multiple-offer situation, many buyers feel that opting out of their Home Inspection will help them to gain the upper hand in negotiations, and that this decision could save on some of the many expenses they will encounter during the real estate transaction. However, this is not the case; not having a Home Inspection isn’t advantageous, nor is it financially responsible. In addressing bidding wars and the ways in which buyers can protect themselves, Weisleder urges, “don’t bid without an inspection”.*** He describes the climate in Toronto, saying “buyers are paying tens or hundreds of thousands of dollars over the asking price. What’s worse, many buyers are still putting in offers without any conditions, hoping this will help them clinch the deal.”***

New HomeBidding wars can be both discouraging and expensive. Weisleder advises buyers that, “in an environment of bidding wars, odds are that you will lose up to five times before you get the house you want.”*** While it can be devastating to fall in love with a house, only to have another individual purchase it, and then have that happen over and over again, you shouldn’t start waiving your conditions – especially your Home Inspection. “You may pay up to $2,500 in inspection fees before you get an accepted offer. In my opinion, when buying a million dollar property, this is a worthwhile investment. I have heard too many stories of people who bought without an inspection, only to discover major problems after.”***

A Carson Dunlop Home Inspection and inspection report help to provide homeowners with the critical information they need. Check out a sample of our report to see how we can help you. The report includes:

  • A summary page with key findings
  • Improvement recommendations for conditions within the home, with timeframes and cost estimates
  • Photos and colour illustrations for clarity
  • A check for manufacturer recalls on appliances through RecallChek

We recognize that house hunting in a competitive market can be hectic and stressful. As such, we try and make it as easy as possible to get the information you need to make an informed decision about your home. Not only do we offer sameday and weekend inspections, we also have discounts available to Carson Dunlop clients who have had to do several inspections due to unsuccessful bids.

Our inspection report is delivered to you via email the same day your inspection is completed. Our inspectors are available multiple times a day, seven days a week. You can schedule your inspection online or over the phone at 800-268-7070.

Feel free to call or email us anytime with questions or concerns. We look forward to welcoming you to your new home!


*SOURCE: Globe and Mail - http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/more-canadians-willing-to-enter-bidding-war-to-buy-a-home-survey/article17311905/
**SOURCE: Globe and Mail, Sydnia Yu - http://www.theglobeandmail.com/life/home-and-garden/real-estate/beaches-house-sparks-12-way-bidding-war/article17136141/
***SOURCE: Toronto Star, Mark Weisleder - http://www.thestar.com/business/personal_finance/2014/03/14/toronto_real_

Topics: Home Inspection, Market Advice, Home Inspector Advice, Carson Dunlop