There is nothing rosy in the real estate industry right now.
Talk to Sylvain Brosseau, building expert and owner of Groupe Burex. Her phone keeps ringing, and these days it’s never for good news. They are desperate buyers who contact him because they have just discovered the pot of roses in their new property. In his own words, he has never seen such a crisis.
“The number of horror stories has quadrupled and this concerns both prestigious homes and affordable homes,” explains Mr. Brosseau. This is because never before have more buyers been skipping the inspection for fear that the seller will reject their offer to purchase. »
The phenomenon of crazy real estate bidding is creating a very big problem. Take the example of a duplex sold recently in the Ahuntsic sector, in Montreal. $700,000 for a small building from 1940. The buyers won a higher bid among twenty offers, in particular because they did not require a pre-purchase inspection.
Damned foundations
It is only after moving into the building that the couple discover that the concrete foundation is crumbling. Verdict: $200,000 renovations are needed to avoid a collapse.
“The foundation is scrapit was camouflaged with roughcast, and the buyers don’t have the money to renovate it,” explains Sylvain Brosseau.
falling wall
A retiree recently moved in with her single-parent daughter and her three children in a bungalow in Saint-Jean-sur-Richelieu. She quickly realized that a wall was collapsing, and more than $150,000 was needed to repair the structure, half the price paid for the house.
Another buyer recently shelled out $465,000 for a single-family home in Longueuil.
He realized, too late, that water infiltration in the basement was threatening the building. $250,000 is needed to correct a problem that could have been detected during a pre-purchase inspection.
Forced to gamble at the casino
But why buy a house blindly?
“Right now, many brokers aren’t waving their hands, but they are implying that if the buyer includes an inspection clause in his offer to purchase, the seller simply won’t accept it,” explains Inspector Sylvain Brush.
Some brokers organize 15-minute visits. 15 short minutes for a purchase of $500,000, is that reasonable? And just like in the casino, buyers hope that luck will be on their side. When you’re competing with twenty, thirty, or forty buyers, you tend to leave out a few details. But it is a very risky bet.
Rumor of law in 2021…
Is it up to the government to impose itself as sheriff in the Far West of real estate? In some areas, such as Montreal, almost half of single-family homes are selling above the asking price.
In the spring of 2021, the Minister of Finance flirted with the idea of legislating to make professional inspection of a property compulsory before it changed hands.
“Citizens who make acquisitions tend to limit their legal recourse, to waive inspections. It is not a good practice, “said Eric Girard in April 2021.
But, nothing a year later
Well, a year later, nothing has changed, even the situation has gotten worse. And still no question for the Legault government to tackle the problem of secret overbidding head-on.
On page 59 of the last Girard budget, we read that “the forms used by real estate brokers have been modified”. They now contain “clear warnings indicating that a promise to purchase without an inspection clause is appropriate only in specific circumstances”.
Clearly, we recognize the problem and we are content to issue a warning lip service. Nothing more ! While a real estate war is being waged, it really feels like there is no sheriff in town. And in a similar world, for more and more families, the investment of a lifetime turns into a simply insurmountable money pit.