Home Inspect for the Unexpected

A house is more than a home; it's a story waiting to be told.

In this episode, Des checks in with veteran home inspector Richard Gaughan in a deep dive into the evolving dynamics of property evaluation. 

Amidst a market that once raced past such precautions, they explore how buyers and sellers are now embracing the protective reassurance of detailed home assessments. 

Richard's 30 years of expertise reveal not just changing trends, but the intricate dance of inspections, renovations, and real estate savvy—all brought into a narrative that demystifies the once-daunting aspects of asbestos, knob and tube wiring, and the true bones of a house. 

Listen For:
5:07 The Importance of Buyer Inspections
9:16 Focusing on Buyer Priorities
14:39 Guidance for Buyers
27:52 Pre-list Home Inspections Value

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Recorded in Sep 2023

Transcript

Desmond Brown (00:00):

The home inspection when the market was going crazy and potential buyers were competing in multiple offers. People didn't want to include a condition on a home inspection in their offers in fear of losing the house to an offer that had no conditions. The market has changed now, and we're seeing a lot more offers with home inspection conditions being accepted. That's great news for buyers. It may be a no-brainer, but a home inspection is very important. I'm Desmond Brown and today on Sold in the Six. My guest is a home inspector who has been helping buyers get peace of mind for more than 30 years. Richard Gaughan is with National Home Inspection and he joins me today on Sold in the six. Richard, welcome to Sold in the six.

Richard Gaughan (01:01):

Hi Desmond. How are you doing?

Desmond Brown (01:03):

I'm doing great. It's great to see you again. So the market has changed quite a bit. What are you seeing out there now as a home inspector?

Richard Gaughan (01:13):

Well, we've often been told, and my schedule confirms it, that when we're busy, the market is active. And there's no question for the last probably year anyways, it has been soft and the home inspection industry, my colleagues included, have confirmed this. We have just not been as busy as we normally would be through say, the fall market last year. But that seems to have changed somewhat this spring market Now, I wouldn't say it is gangbusters. I just spoke to a colleague of mine last night and he said it is still relatively soft out there in the home inspection market. I just happened to be busy, so I could be just good fortune and having Well, you're

Desmond Brown (02:14):

Good.

Richard Gaughan (02:15):

Yeah,

Desmond Brown (02:16):

That's the thing. I think we give, we go back, you and I go back, oh gosh, back to the eighties, right? So we go back like 35 years or so, right?

Richard Gaughan (02:24):

Absolutely. The days of max hallmark.

Desmond Brown (02:27):

Yeah. And I'm still back at RE/MAX Hallmark

Richard Gaughan (02:30):

Way back in the early stages.

Desmond Brown (02:32):

Yeah, the early stages of home inspectors. I'm going to talk about the early stages of home inspectors in a little while, but you say you're not as busy, but the type of home inspections have changed for you too, because in a really, really busy market, you're getting a lot of people who are listing their properties, getting home inspections done on their property so they can supply that home inspection to the potential buyers. So these potential buyers will come in with offers, but now it's kind of switched around a bit, hasn't it? You're not getting as many pre-list home inspections.

Richard Gaughan (03:06):

Well, my business, our business is primarily listing inspections. So we are in fact doing the vast majority of our work for the seller or for the selling the listing agent. I would say that represents over 90% of our business easily.

Desmond Brown (03:27):

Well, that's really changed.

Richard Gaughan (03:29):

It has changed dramatically. And those agents, perhaps one of the reasons is our report that we generate is a good read for someone who wants to just look at a document. It's a narrative style report, so they don't have to pick up something that's complex or requires a lot of interpretation. They can very quickly read a one-page summary or if they want the detail, it's only about 12 or 14 pages of text to read. There's no, it's not a checklist type report writing system. That's just the way we have chosen to convey information on a house. And I think that has resulted in us doing primarily listing inspections, which honestly for myself is preferable. I find I'm more efficient. I don't have to obviously sit there and explain a lot of, I don't have to convey a lot of information to the homeowner. They live in the house; they know their house more or less. If it was a buyer inspection, which was traditionally what we only did go back 10, 20, 30 years, you would have to walk the client, a buyer through the house and explain things, educate them on the house and answer all the questions. And of course, a buyer, especially if it's a first-time buyer, is going to have a ton of questions. And so

Desmond Brown (05:07):

They will. And I know your partner, mark has done a number of buyer inspections for me. I know you're saying that you're more like 90% you and Mark with your company, you're doing a pre-list for sellers. But let's get into the buyer inspections and how important they are and what you will be looking for. You're going to put your buyer inspection hat on right now. What are the first things you're going to be looking for? Because I have used you for those, for many, many of those, and you've found some things. I remember the one house down in the Glen Manor area and the beaches that you found from me, like half the house had knob and tube wiring, and the people who had bought it before waived the home inspection and had no idea that they had knob and tube wiring in the house. So they were really, really surprised when we brought that up to them. And then we had to get an abatement on the purchase price. And you do remember that one, don't you?

Richard Gaughan (06:06):

I don't remember that one. I remember the one of the underground tank in the basement

Desmond Brown (06:12):

Floor. Oh my goodness. In good manner. That's right. I

Richard Gaughan (06:13):

Still tell that story to people because that was extraordinary. To tell you the truth, the fact that

Desmond Brown (06:19):

I was able to was on the ground oil tank

Richard Gaughan (06:21):

That cost them a fortune. I think you told me it costs like $80,000 to, they had to shore up the basement, they had to excavate. I mean, that was a big deal.

Desmond Brown (06:33):

It was, and these people were great. When we listed their house, they said, look it, we have gas heating, but there is this oil outlet, or I guess, what do we call it, wherever they used to put the old oil in. Remember what it was

Richard Gaughan (06:48):

By the front porch. And I remember That's right. What I did is I took a stone and I dropped it down and it took a while to hear it drop. And I thought, that's weird. And I think I got a string and a rock or a bolt, and I dropped it down and realized that the pipe was way down to the bottom of the basement, and that made no sense at all. And that's when No, it didn't. Anyway, do you want to talk

Desmond Brown (07:17):

About I remember that. Yeah. And those people, they were great because they wanted to disclose that they weren't sure if there was an oil tank there because they'd bought the house like that, but they said there might be an oil tank there. So sure enough, we had somebody come in later, they did imaging, I guess it was infrared imaging through the floor and found that there was this oil tank in the ground underneath the finished basement.

Richard Gaughan (07:45):

They must have built the house on top of that tank for that to have sat. You couldn't have got the tank in otherwise It would've been, yeah, it was crazy. It would've been a hole in the ground. And then they put the tank in and then poured the floor and built the house on top of it.

Desmond Brown (07:58):

Yeah. So then do you remember when they finally did go in, the people who went in to remove the oil tank, they opened it up, they had to cut the top off of it, and when they did, they found that, well, they didn't cut the top off. They've cut off enough of it to figure out that the tank was still full. It was still full of

Richard Gaughan (08:20):

Oil, which I don't think I heard that. Which is a good yes, right,

Desmond Brown (08:22):

Because this area is one of the prestigious neighborhoods in the beach area, and the tank was a top quality tank. So the good news on that with the tank still being filled with oil is that it was a very good tank and it didn't leak into the ground or any of the surrounding homes. So we got lucky that way. But at the same time, they had to dig up the floor, take it, drain the tank, cut the whole thing out, and it was finally done. So that was a little bit of a surprise. And yeah, luckily, like I said, we had good sellers who wanted to disclose any or everything about their house so that the new buyer didn't have any surprise. Then they were surprised too, because like I said, when they bought the house, they were heated by gas. They had no idea that was going on. But anyway, with buyers, what are the things that you're going to be looking for right away

Richard Gaughan (09:16):

When you go in? Well, first off, inspecting a house for a buyer from my standpoint, is no different than inspecting the house for the seller. I look at exactly the same things with the same intensity, with the same end result, which is to document the various components of the house. And the only difference, which I alluded to earlier, is that with a seller, I don't have to sit there and spend a lot of time explaining things because that becomes self-evident in the report. But when I'm going through a house with a buyer, obviously I'm going to be looking, as we always do, for the major things, which are the structural aspects of the house, the foundation, that type of thing. Basement leakage is a big one for buyers, right? Because that's an expensive fix. Those are certainly the main things. And then the roof, what we want to determine is whether there are immediate repairs and what they amount to dollar wise. So if the house has original wire, is it knob and tube original wire, or is it a more recent version than that? That doesn't have to be replaced immediately. If it's knob and tube wire, they're going to have to deal with that as a condition of insurance, typically within the first three months of owning the house. So that's a very important thing in buying an old house.

(10:57):

The plumbing, the mechanicals, the heating, the cooling, interior finishes. Basically I put myself that I'm wearing the hat of the homeowner and they're living in the house. What are they going to have to spend money on? What is immediate for them? And most people who buy a house, especially if they're first time buyers, they often don't have a lot of money to fork out after they've landed. So they need to know if they've got extraordinary repairs to deal with the day they move in. And that's kind of where our focus is. So if it's longer term things, I mean, if the roof has another five years, people generally don't fuss about stuff like that. But if it's the immediate stuff, and buyers often don't know what costs are. So when they hear that they have to, even simple things like replace a furnace, some of them have ideas that it's 10 or $15,000 and it's not that much money.

(12:13):

Environmental issues, I mean, technically we're not doing an environmental inspection and the oil tank we were just talking about certainly falls into that camp. But obviously if I'm doing an inspection and I have the ability with some very simple due diligence to figure out whether there's an oil tank in the ground, I'm going to do that. But that's not the mandate of doing a home inspection. Asbestos is certainly not it, but again, if I see it wrapped around a pipe in the basement, I'm going to draw attention, draw the buyer's attention to that, and those are things that scare people, right? Asbestos mold. If I see some mold in the corner of a basement, I'm going to say, Hey, you got some mold there. And I try to put things in perspective because a lot of times things are nowhere near as bad as people would think they are because they don't know.

(13:11):

So I did a house yesterday and there was a bit of mold in the corner of the basement from a leak old. It was all bone dry down there, and I said, just cut it out. It's not a big deal. Just cut that out and it should be fine. Just keep an eye on things. But some people get real panicky and they bring in mold remediation companies, which is not a bad idea. I am not saying don't do it, but sometimes you can end up then spending thousand, $2,000 having the whole house assessed for something that is other than a garden variety leak in the corner with a bit of black on the drywall. So we try to be realistic about what we find and present options to buyers. We certainly answer their questions as best we can give them renovation ideas. A lot of people buy an older home, they want to take out the wall in between the hallway and the living room and open things up, so calm and they ask, can it be done? What's involved? And I'll give them a five or 10 minute explanation of what the limitations are and that sort of thing. So it's a good learning experience for a buyer. But as I say, for myself, I don't see a lot of buyers at the moment. I'm primarily doing listing inspections, which I'm happy to do.

Desmond Brown (14:39):

Yeah, that's good. But you're going to be very helpful in this podcast for buyers too. So I wanted just to talk about a couple of things that you didn't bring up. So knob and tube, with the amount of knob and tube that's out there, you'd think that the whole city would burn down, you know what I mean? The way the warning signals are out there or the warnings that are put out there about it, but it's really not that bad. I mean, a lot of people have been living with knob and two for years and years and years. What comes into play here is the insurance, right? So it's the insurance companies don't want to touch it, and if they do touch it, they will say, we're going to give you three months. Like you said, in most cases, the insurance company will say, okay, you're buying this house. We know it has knob and tube. We're going to give you three months to remove it. And sometimes the removal of knob and tube can be quite complex, and then you've got to go through walls and then to restrain wiring through a completed house and all that. It can be quite a job.

Richard Gaughan (15:36):

Oh, absolutely. And to no surprise, the trades have realized that there's good money to be made in doing these types of things. And so all of a sudden, electricians, as an example, make very good money these days. And so the cost

Desmond Brown (15:58):

Of just concentrating on that,

Richard Gaughan (16:00):

Yeah, just doing. And so people looking at a house have heard from their friends or read online that rewiring an old house could cost $25,000, and it certainly can, but that's a lot of money. And when you start looking at the amount of time it takes to do the work and do the repairs, you have to ask yourself, where is that $25,000 going? So you have to, in some ways, be your own general contractor, ask questions about what is going to be done before you just say, yes, I'll pay it. Because otherwise, all of a sudden that renovation can go from 30,000 to 50 and up easily, easily in

Desmond Brown (16:53):

A blink

Richard Gaughan (16:54):

Or multiples of that. So the cost associated with doing whatever renovations they may be or wiring, you do have to look at the material costs involved. And then the laboring costs, the amount of man hours it takes to do a project. And very simple math will tell you whether your contractor is in the ballpark for what it should cost. And I tell people that all the time. So that goes right across the board for any type of renovations being done,

Desmond Brown (17:28):

For sure. Now, you mentioned asbestos, and we do run into this from time to time, and it's usually with the old hot water heating systems and the pipes are wrapped in asbestos. Now, the word asbestos scares the crap out of people, however, it really doesn't have to be that scary. Okay. And a lot of the stuff that I'm talking about here when it comes to knob and tube wiring, asbestos, and we're going to talk about leaks too. The knowledge I got from all of this stuff is by going through houses with people like you and richer, sorry, you and Mark and John Berry used to work for you and all the home inspectors, which really helps me. Not that I'm a home inspector, but I can see things and just say, look it. Don't worry about that in asbestos. With asbestos, it's fine unless it's disturbed. And I can advise people about that, about leaks, about knob and tube, and then we can further explore or we can just say, oh no, we're going to avoid this if I see that situation is really, really bad. Like I said, I'm not a home inspector, but I can tell when something's really, really bad just from going through all these inspections for years and years with you. So let's talk about the asbestos and should it be scary for people when they hear that the pipes are wrapped

Richard Gaughan (18:47):

In it? Well, it's funny, I had a lengthy discussion yesterday afternoon with a good friend of mine. Their daughter just bought their first house and I was unable to do the inspection. So they brought in a, well-known company, Carson and Dunlop, which are a great company, and they did the inspection and they found asbestos wrapped around the heating ducts where they passed through the floor, which is a common place to find asbestos in homes built in the fifties and sixties. So we always look for that, and it's not an onerous task to get rid of it. You can get an asbestos abatement company to come in for a typical house, get it removed for about $2,000. So you write a check and it disappears. So that's fine. And I will tell people probably a good idea to get rid of it because there's airflow there.

(19:38):

Who knows? There could be particulates getting into the air. And when you go to sell the house, do you really want to have to advertise that you've got asbestos there? So that makes sense. But the problem for my friend's daughter was that the comment came up that this age of house, there could be asbestos in other areas like in the plaster, in the walls and things. And now all of a sudden, so they were quite concerned about this, and so I had to bring her down off the edge from saying, listen, of course everything's possible. But the inspector identified the obvious area where it is. It's visible. If there happens to be any asbestos in the walls, there's no way you're going to know without doing a lab analysis. And so if you're getting into major renovations where you're going to be ripping walls apart and there's going to be plastered dust everywhere and you're concerned, get a company to come in and do an analysis, but you can't do that analysis in the 11th hour before signing off on a conditional offer of a home inspection.

(20:50):

So you have to make that decision. So I calmed her down. I'm not there to diminish the significance of what asbestos means because it is, it's a health hazard, but you have to put things in perspective. So she's dealing with the asbestos around the heating ducts easy enough, and the rest of it was, okay, if I have to look at it further down the road, I can do that. But she wanted to know whether to go ahead buying the house or not. So I kind of gave her that confidence that it was probably safe to do so if asbestos was her biggest concern.

Desmond Brown (21:29):

Yeah. Well that's great, Richard. And then now let's talk about leaks. So you mentioned a leaky basement that would be major, but at the same time, what I've learned is that these things can be rectified fairly easily and quickly by, number one, taking a look at the grading of the outside, an e trough, a downspout that may be overflowing. I mean, there may be damage already done in the basement or whatever, or if it's a finished basement, there's going to be damage. And yes, you'll have to fix that. But the problem is usually something is simple as really an overflowing east trough or a downspout that's not far enough away from a house.

Richard Gaughan (22:07):

Those are the simple and obvious cause and effect things to go through, obviously. And until you have done that, you really can't look at the worst case scenario, which is you got to waterproof. So I look at leakage in the basement in exactly the same way. So when you have exhausted all the obvious fixes like landscaping improvements or non-functional ease troughs or extending downspouts away from the house, when those are likely not the cause, then you have to look at more aggressive ways of dealing with it. And fortunately, over the years they have, people have started doing interior waterproofing systems, which are generally significantly less money and less upheaval on, you don't have to rip up your sidewalk, your walkways around the house and that. So interior waterproofing systems, especially if you're finishing finishing a basement in an older home, it's almost become standard issue to put a delta membrane around the inside walls prior to putting up your framed walls and insulation and drywall just to create that barrier between the foundation and all this money you've spent finishing your basement. Even if it is a relatively dry basement, it's just a good thing to do. And if it leaks occasionally, it's a great thing to do. So you have choices. But at the end of the day, if have to excavate all four walls, you can spend 40, $50,000 on a house. Didn't use to cost that much, but it's costing that much now,

Desmond Brown (23:56):

Right? It sure is. Oh my gosh. Oh, it does. Yeah. Again, I'm going to come back here about you do a lot of pre-list home inspections, and I've used you to do pre-list home inspections. I've also used you and Mark to inspect houses for my buyers that even inspected my own houses that I bought when I am showing a house. And I know that the house is a hot property, that they're probably that under listing the house to get multiple offers. And then the listing agent sends me a home inspection. I said, is there a home inspection? Yes, listing agent sends me a home inspection and I see a national home inspection. I feel a lot better. And that's what I tell people too when we do. Yeah, definitely. Because I know that you're legit. I know there are, like you had mentioned, some of these home inspectors just do little checkbox things along the way, and there's no explanation, there's no depth to the home inspection. But if anybody's out there listening and you end up with a national home inspection inspection in your hands, you've got a great inspection. And the next step, of course would be to explore a little bit more of what that inspection is brought up. And I know that you are open to speaking to the buyers or even doing a walkthrough with them after for an additional cost. Isn't that correct?

Richard Gaughan (25:17):

Yep, yep. Fortunately, I think our reports are detailed enough that people don't usually ask us to walk through afterwards. Sometimes we get calls from buyers if it's a listing inspection and they have questions, some clarification on some of the key points that were contained in the report. But yeah, absolutely. We can do walkthrough inspections if that's what they want. And inspections, there's a lot of inspectors out there. Hopefully if you're getting an inspector, the person is licensed. In other words, they have their RHI designation, which is a provincial designation, registered home inspector. They belong to one of the associations largest being the Ontario Association of Home Inspectors. And that association requires that you have insurance. And so that's important as well. And thirdly, I would suggest that an inspector that has had a lot of experience in the field will be able to anticipate things that may be wrong with the house or things to look for.

(26:32):

I just know when I get to a house, I often know the neighborhood. I know that neighborhood has termites. If I see a certain type of foundation today I saw an old poured concrete foundation material that is very porous and gets crumbly. Well, that is a huge red flag for me when I show up at house. And I know that the type of foundation, I know what to look for, there are certain tell, there are certain things that I'm going to start focusing on and certain information I'll convey to the buyer about that foundation that's quite relevant. One of them being they need to probably waterproof the outside walls regardless of whether it's leaking or not, because you got to stop the moisture getting into the wall and softening up the foundation even further. So these are things that experience provides me. Yeah, it's like you as a real estate agent, right? Years and years of doing real estate, you are able to cut to the chase and know what's going to be best for the buyer, right?

Desmond Brown (27:38):

No, exactly. And I always lean towards making sure that they get a home inspection one way or another. It's so important, and I don't have to preach to you about how important a home inspection

Richard Gaughan (27:52):

Is. Yeah. Often the reason why the listing inspections have become so prominent, and it's not universal. I mean, if you go into the Mississauga region or even into the Richmond Hill,

Desmond Brown (28:04):

Frustrating as a buyer agent when that happens, when they have the multiple offer nights set up and then there's no

Richard Gaughan (28:11):

Inspection. There's no inspection, and it's not the norm to do that yet. They put you as the agent and the buyer in this situation where they just have to buy it blind, right? That's it. And so it has come to be in our area that we work, yours, myself, even though I do, I work the entire GTA, but the listing agents recognize that if there are going to be multiple offers, if there are going to be offers presented on a set day, let's make it straightforward and give people a home inspection report upfront. They can read the report, they know what they're buying. They can't show up at the table with uncertainty and that sort of thing. Now they still have every right to get their own home inspector in. And on occasion, we do inspections for buyers where a report is sitting there that was prepared by the listing agent and the seller. And my client has chosen to have their own inspector review the property. And that's quite common. And I think that's totally legit. And you get the opportunity to walk around with the inspector and again, find out firsthand what's going on with the house. Right?

Desmond Brown (29:43):

And the one thing that some people overlook too is that they might be buying a newer house and they go, oh, we don't need an inspection. But your a renovated place and Oh, that's fine. It looks good, but get an inspection done. Just get an inspection done. You're going to sleep a lot better. And you're not going to have a lot of surprises down the road if you, at least you know what you're getting into.

Richard Gaughan (30:09):

Well, and funny enough, new construction or gut jobs and rebuilds, those type of things, those are sometimes the most complicated inspections for us to do because you are looking at the house in some ways from a different set of glasses. You are, everything should be right. Whereas in an old home, of course, everything's not right because it's an old home and the building code has changed dramatically. If it's a hundred year old house, there was no building code. So older homes, we are looking for safety, we're looking for function, wear and tear. But in a new build, the expectation is that the contractor has done things properly. They haven't cut corners. The heating ducts are blowing air. They haven't crossed over the hot and cold water tap pipes at the sink. There's just so many things. So sometimes these new homes, the list of deficiencies is surprisingly large.

Desmond Brown (31:23):

Sorry. Incredible. I'm thinking back about the new house that Alice and I bought and the dryer vent or Yeah, the dryer was vented into cinder block. And we wondering, the dryer kept cutting out. I said, what's going on here? And that's what happened. They did not vent it outside. It was right into the wall and that the builder

Richard Gaughan (31:49):

Did that. Now, that's a safety that can be quite dangerous. You can get a fire out of that, so that's really wrong. But when a builder puts a house up or a developer or whomever and puts it all together, you can demand that it be done right, that there's no excuse for are poorly bad work or incorrect work. In my mind, it should be. It doesn't have to be perfect. I'm not talking about quality of materials or that sort of thing, but the finish, the expectations are there that it should be done more or less properly.

Desmond Brown (32:29):

Yeah, definitely. Okay, Richard, we got to wrap up. Believe it or not, we've been going for just over a half an hour. Incredible. I was wondering if we would be able to fill this time, but we always do. I know. Okay. Yeah,

Richard Gaughan (32:40):

No, it was nice talking to you.

Desmond Brown (32:42):

Yeah, it was great chatting with you again too, Richard. So anyway, like I said, it's easy for me to say get a home inspection. It's easy for you to say get a home inspection, but really get a home inspection one way or another. And if you are a buyer and you're going into a multiple offer situation and a home inspection is supplied, if you see a national home inspection inspection, you're okay. If you don't, then get on the phone and make some inquiries to that home inspector to find out a little bit more about it and ask around about how reputable these inspectors are. And speaking of reputable inspectors, you are one. How can people get in touch with you?

Richard Gaughan (33:24):

Well call, give us a call at National Home Inspection. (416) 467-7809.

Desmond Brown (33:32):

Alright, fantastic. Richards, thanks very much for joining us today on Sold in the Six.

Richard Gaughan (33:36):

Yeah, nice chatting with you, Desmond. Yeah, cheers.

Desmond Brown (33:41):

And that's our latest episode of Sold in the Si6. As usual, I'd like to thank my producer, Doug Downs of Stories and Strategies for putting this excellent podcast together. And if you like the piece, subscribe and leave a rating and send it to a friend. And when you leave that rating, it's really easy. All you have to do is go to the show notes and it's one click and leave that five star rating. And if you need to get in touch with me, you can email me a desmondbrown.ca and also follow me on all of the social media platform from my handle is @Desinthe6ix. If you're a realtor outside of Toronto and you need someone to look after your clients who are either moving to or from the greater Toronto area, please keeping in mind, I promise that your clients will be well looked after. Next time. I'm Desmond Brown.