Toronto Real Estate Blog

Home inspections used to be initiated almost exclusively by the buyer in a real estate transaction. However, pre-listing inspections, paid for by the seller before a house is put on the market, are becoming an increasingly popular way for real estate agents to try to reduce the possibility of last-minute surprises and create a marketing edge.

A prelisting inspection may lead to a house selling without conditions. It can be a great learning tool for a real estate agent to help him speak more knowledgably about the house he is trying to sell, and it can help the seller prepare the Seller Property Disclosure Statement (SPIS).

“The pre-listing inspection (PLI) is advantageous to sellers, buyers and real estate agents as it can help establish a fair price for that home in that location in today’s marketplace,” says Andrew Dixon, President, Ontario Association of Home Inspectors (OAHI).

“A PLI can help the seller and their real estate agent by identifying areas where improvements and maintenance may be beneficial and/or necessary. A buyer can purchase with the confidence of knowing that the home has been inspected by an unbiased professional whose primary responsibility is the state of the home and its systems.”

According to the OAHI, any home inspection including a PLI is concerned with the defects and the lifespan of the systems of the home. The PLI report should include all the major defects and the minor defects that could develop into major defects (either structurally, monetarily or safety related) over time. The inspector should provide justification for most items identified such as pointing out what needs attention to avoid premature deterioration.

While thorough, the PLI doesn’t comment on the aesthetics or curb appeal of a home. “The pre-listing home inspection is a visual examination of how the house is performing in the field,” says Alan Carson, Vice-President, Carson Dunlop.

“We’re looking to see if this house is going to do its job in terms of comfort, safety and durability. The fact that the carpet is stained is not going to show up in a PLI and it’s not a code compliance review either.”

Carson says pre-listing home inspection are concerned with the nuts and bolts of a house. For example, does the roof keep water out, do doors and windows operate properly, does the furnace keep the house warm and the air conditioning keep it cool and do the plumbing and electrical systems do what they are supposed to do?

“Home inspection is a building science not a health science,” says Carson. “Health scientists are concerned with what we are breathing or ingesting, but home inspectors are not generally trained in health science. To us mould is a sign that there’s moisture where it shouldn’t be.”

However, both Dixon and Carson say that if mould or other potential health hazards are uncovered in the PLI, the home inspector will recommend further investigation. However, while reducing the “need” for a buyer’s home inspection, the PLI does not eliminate that possibility, says Dixon.

Listing real estate agents can add value to their services by suggesting a PLI and helping clients to find a qualified home inspection company to conduct the pre-listing home inspection. “To judge the thoroughness of an inspection company always ask for referrals,” says Dixon.

“Check their web site, ask for their standards of practice and risk management policy, what their follow-up procedures are and examine the contract.” He says the contract should be consumer friendly, easy to understand and should clearly identify what-is and what-is-not inspected.

In addition he suggests asking for association membership, level of membership and level of education, whether the inspector is a sole proprietor or member of an inspection firm. “Above all, identify your expectations and ask the inspector if they can be met. Ask for a thorough but impartial inspection of the home, clearly identifying the concerns in an efficient and straightforward manner with recommendations as required.”

Even if sellers decide not to make any of the suggested fixes, a prelisting home inspection can still prove beneficial by allowing sellers to obtain cost estimates for needed work, so they can offer potential buyers an appropriate discount off the listing price.

“Many people wouldn’t agree with me, but I believe in most cases that the seller shouldn’t replace the roof or the furnace or other high ticket items,” says Carson. “If I’m the buyer, I want to choose the colour of the shingles or get the most efficient furnace and have warranties. I’d encourage the seller to say the price reflects the need for a new roof or furnace instead.”

Finally, both Dixon and Carson feel that it is always a good idea for the real estate agent to be on hand for the home inspection. “It is always advisable to have all concerns identified and questions answered in person. Things can get lost in translation and the waters muddied,” says Dixon.

Repairs are more than just a facelift

Here are the most common fix-ups for home sellers according to the OAHI. All are relatively low cost and many are safety items. Most are also expected in any home no matter what the age and would increase or at minimum guarantee fair market value if completed.

1. Fix any basement crack & get a warranty – especially when the inspector tells you it has leaked – no matter how much over how many years!
2. Extend the downspouts to discharge water well away from the home.
3. Prep and paint the exterior wooden trims/frames/doors, etc.
4. Put a handrail where needed.
5. Make sure the smoke alarms test and work properly and are on every floor.
6. Repair or replace the defective GFCI outlets.
7. Upgrade to a 100 Amp service with a combination panel and breakers.
8. Do a roof tune-up or get a new roof.

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When it comes to the single largest investment most of us will make – buying a home – consumers want to make sure they’ve protected that investment to the best of their abilities. As real estate agents, providing them with sound, knowledgeable advice will maintain their confidence, and perhaps their business.

When it comes to protecting that investment, one option to consider is title insurance – a cost-effective protection that shields homebuyers from many of the major risks that can affect the ownership and/or future marketability of title to a property. Like all insurance policies, title insurance is a contract of insurance that comes with terms and conditions. To get the most value out of the title insurance policy, it’s important that homebuyers understand how title insurance works, and what risks title insurance does and does not cover.

Why even consider title insurance? Because the unexpected can and does happen. The most typical situation in which homebuyers call on their title insurance policies involves unpaid utility or realty tax bills from the previous owner. The second most frequent category of claims relates to building code issues. For example, a couple buys a house planning to add a new wing to their home. When the building inspector arrives for an on-site inspection, he discovers that an earlier renovation was not done to code, and the whole home needs to be rewired. If the owners have a title insurance policy in place, the insurer could compensate the homeowners for the costs of bringing the electrical work up to code.

Title insurance also protects homeowners if the house is not located on the property accurately and encroaches onto neighbouring land, or if a pool has been built that is actually on a neighbour’s property. A title insurer could resolve this problem by buying the piece of land that the house (or pool) actually sits on from the neighbour, and taking care of all the related legal work.

Condominium owners have also found title insurance protection useful. Take the example of a newly built condominium unit purchase. The buyer of a particular unit is shocked to find out that the unit purchased is a different unit from the one that he or she was expecting to buy. Unfortunately, the unit actually acquired is worth less because it does not have a “lakefront” view. In this instance, the legal services coverage available through the TitlePLUS policy was called on, and the buyer was compensated for the difference in value between the unit he took possession of, and the unit he thought he had bought. This legal service coverage, which protects buyers for losses suffered as a result of the negligent errors of their lawyer, may not available from most other title insurance companies.

Title insurance can also benefit buyers in other ways: It can eliminate the need for an up-to-date survey while protecting against any title-related issues that would have been identified by that survey.

Fraud protection

For many buyers, the fraud coverage provided by title insurance is particularly reassuring. Title insurance can protect homeowners if they are the victim of fraud, and may also pay the costs involved in defending their ownership in the property and restoring their title to the home.

As with any type of insurance policy, certain exclusions will apply. Typical issues not covered include, native land claims, environmental hazards and the buyer’s rights to change the use of the land or undertake renovations or construction. Problems the buyer agreed to in the purchase agreement or failed to disclose to the lawyer will also not be covered. It is therefore vital that buyers tell their lawyer of any problems that their real estate agent advised them about or that came to light when visiting the property. As well, individual policies may contain exceptions specific to the homebuyers’ property. For example, minor utility easements or rights-of-way for a mutual driveway may be specifically listed as exceptions to coverage.

Bear in mind that, in general, if the problem is not a “legal problem”, it is likely not covered. Title insurance provides protection against title-related problems; it is not home warranty insurance, and will not protect homebuyers if the fridge breaks down or the furnace gets old. As with any insurance purchase, the homebuyer should consult the policy for full details of the actual terms and conditions and seek advice from a real estate lawyer. When purchasing a home, a real estate lawyer can help the buyer sort out the various protections offered by different title insurance companies in order to get an idea of which risks are covered and which are excluded.

To help homebuyers better understand the benefits of title insurance, and the role of a lawyer in a real estate transaction, TitlePLUS insurance has created a free Real Simple Real Estate Guide. You can access the guide by going to www.titleplus.ca.

This article appears courtesy of TitlePlus. Nadia Dalimonte is student-at-law at LAWPRO. Kathleen Waters is vice president,TitlePLUS.

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Contact the Jeffrey Team for more information

The Insurance Industry Has Missed The Mark

By Carson Dunlop

A few months ago, we wrote an article about knob and tube wiring and the over-reaction of the insurance industry to this wiring. Many homebuyers are discovering that insurance companies are not only concerned about knob and tube wiring; they are also worried about 60 amp services.

Is a 60 amp Service Unsafe?

In a word, “No”. A 60 amp service is small by today’s standards; however, it might surprise you to know that a smal house could be built today with a 60 amp service and still comply with modern electrical codes. A 60 amp service comes with 60 amp fuses or a 60 amp breaker. If you draw more than 60 amps, the fuses will blow or the breaker will trip. The fuses or breakers are the brains of the system and they are performing their intended function. They are simply shutting off the power. While this may be inconvenient for the home owner, it is not unsafe.

Electrical Consumption

The biggest users of electricity in a house are things with heating elements. The larger the heating element, the more electricity will be used. In an average home, the stove is the biggest user, followed by the clothes dryer. An electric water heater usually takes third place. If additional large heating elements are found in the house in a sauna or a pottery kiln for example, it is almost impossible to get away with a 60 amp service.

In addition to large heating elements, big electric motors also draw a considerable amount of juice. Air conditioners are prime examples. Therfore, you may find that if a house has a 60 amp service, and has an electric stove and electric clothes dryer, you might not be able to use the two simultaneously. It’s O.K. if you are using one burner, but if you are cooking a turkey dinner with all four burners and the oven on, it’s a bad time to do the laundry.

Many first time buyers however, do not own appliances. If they are buying a house with a 60 amp service, it would be wise to install a gas stove and a gas clothes dryer which draw less electricity. A house with a 60 amp service and gas appliances has almost as much usable electricity as a house with a 100 amp service and an electric stove and electric clothes dryer.

Limited Distribution

Most 60 amp services are found on older systems which have a limited number of circuits. This is a potentially hazardous situation, particularly if the system has fuses rather than breakers. Some homeowners find that their overtaxed distribution system is constantly blowing 15 amp fuses. They replace them with 20, 25 or 30 amp fuses to prevent the fuses from blowing. This is an unsafe condition overheating the wires, and potentially leading to a fire.

The solution to the problem is not necessarily a larger service, but rather a larger distribution system. It is far safer to own a house with a 60 amp service and 24 circuits than a house with a 100 amp service and 6 circuits.

Small appliances with heating elements such as kettles, toasters, irons and hair dryers all draw a considerable amount of electricity for their size. This is why a house with limited distribution system is problematic. If you plug a toaster and kettle into the same circuit, you will draw more than 15 amps and blow the fuse. This would be true regardless of whether the amount of electricity coming into the house is 60 amp, 100 amps or 200 amps. The solution is not a bigger service but more circuits.

In an old house, you might find only six or eight circuits in the entire house. In a new house, you might find that many circuits in the kitchen. As a matter of fact, in a modern Canadian house, the top half and the bottom half of each outlet in the kitchen are on a separate circuit. This explains why you can plug the toaster and kettle into the same outlet without blowing any fuses or tripping any breakers.

So again, the insurance company has missed the mark. They are concentrating on houses with 60 amp services when they should be concentrating on houses with limited distribution systems. We hope this explanation will help them make the connection!

By Carson Dunlop

We encourage clients and real estate agents to call us with technical questions. We get lots of them – and the flavour of the month is condensation.

We don’t want to bore you with technical terms like vapour pressure differential. Let’s keep this simple.

There are two rules at work here:

1) When warm moist air touches something cool, condensation will form.

2) Warm air can hold a lot of moisture; cold air cannot. (While warm air can hold a lot of moisture, it doesn’t necessarily have to. Take a trip to Arizona).

Despite the threats of global warming, it’s still pretty cold outside in the winter. Consequently, windows are cold. If the inner glass surface is extremely cold, condensation (in the form of water or ice) will form, even in a house which has normal indoor humidity. This, believe it or not, is the principle reason for storm windows. The exterior pane of glass provides enough of a buffer zone, that the surface temperature of the interior pane of glass stays warm enough, and condensation is less likely to form.

After doing what we can to raise the temperature of cool surfaces, we should turn our attention to reducing the moisture in the air. The easiest way to maintain low humidity levels is to buy an old house that is not particularly well sealed. Admittedly, the house might be drafty but the drafts mean that cold outside air is sneaking into the house. When that cold air warms up it will have very low humidity. Similarly, warm air that has picked up moisture from cooking, bathing, etc is flushed out of the house.

Unfortunately, this approach flies in the face of current thinking. Modern homes are sealed tightly because every bit of cold air which leaks into a house means that warm air must leak out. This is not efficient.

Another way to get cold dry air into your house is to use up the warm moist air within. In many houses, air from within the house is used by the furnace, hot water tank and fireplace to create combustion and maintain proper draft up the chimney. This warm moist air escapes up the chimney causing cold dry air to enter the house and make up the difference.

Energy efficient homes don’t want to waste this inside air (which you have already paid to heat) by letting it go up the chimney. Consequently, most modern furnaces and fireplaces, bring in outside air for combustion, which increases efficiency.

Taken to the extreme, the most efficient house imaginable would not allow any cold outside air to leak inside nor would it use any inside air for combustion. While the heating bills would be low, the windows would be dripping with condensation and the indoor air quality would be terrible.

The high tech solution is to put in a heat recovery ventilator (also known as an air-to-air heat exchanger). As you exhaust the stale contaminated air from inside the house you replenish it with fresh air from the exterior. While the fresh air and the contaminated air are not allowed to touch one another, the heat from the exhaust air is transferred to the fresh air coming into the house.

In conclusion, condensation within houses requires two major ingredients – humid air and cold surfaces. If you increase the temperature of cold surfaces by adding storm windows and reduce the humidity levels by venting clothes dryers to the exterior, using bathroom and kitchen fans etc., you should be fine. If you still get a little condensation, go to the low tech solution. Open a window!

A Visionary New Green Community at Kennedy and the 401

Tridel is pleased to welcome you to Metrogate, home to what will be the new Scarborough gateway to the City of Toronto. This summer, you can become part of history as a unique area, located just off of the 401 at Kennedy Road, is transformed into a vibrant Naturally Better green community and home to over 2,000 families.

Tridel has carefully planned this future community with an interesting blend of architecture that mixes townhomes and high-rise condos so that there will be a healthy balance of choices, offering something for everyone.

In addition to a location that is close to everything, the Metrogate community will also feature a large central urban park that takes landscaping to an art form with its mixture of flowing water features, sculpted gardens and sophisticated community artwork. There are also plans for a future GO station and extension of the Sheppard subway line, for added convenience.

Tridel has left no planning detail to chance and has provided an extraordinary condo community that will support the needs of the residents; all constructed with the latest state-of-the-art sustainable, green technologies to ensure that the Metrogate community is truly “built for life”.

One thing is for sure. Metrogate will be both a landmark and a destination….a neighbourhood like Scarborough has never seen before.

Metrogate: Built Green. Built for Life

As the largest builder of sustainable condos in the GTA, Tridel is committed to building communities that are environmentally responsible, energy efficient, and healthy places to live. Naturally Better communities are high-performing, meaning they use less energy to run while providing superior comfort to the home-owner. In turn, homeowners pay less money to operate the building and their own condo suites.

Tridel’s Naturally Better communities are healthier places to live than conventional condos. Materials are chosen that have the lowest possible off-gassing chemicals, and technically advanced ventilation systems are in place to allow residents to breathe clean and fresh air. Living in a Tridel “Naturally better” building helps homeowners reduce their ecological footprint by avoiding, on average, at least one tonne of greenhouse gas emissions per year.

In recognition to their commitment to the environment, Tridel is proud to be the recipient of the City of Toronto 2006 Green Award for Energy Conservation.

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Contact the Jeffrey Team for more information