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episode # 3

Five ways to protect yourself when buying a house built before 1980 with Vancouver Home Inspector Aaron Borsch

Five ways to protect yourself when buying a house built before 1980 with Vancouver Home Inspector Aaron Borsch

 

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Episode Summary


 

You’ve done a ton of inspections for myself, my clients, my family – how did you get into the business?

6 or 7 years ago, I was looking to start a business on my own. My background was in finance. An opportunity came along from a franchise called A Buyer’s Choice Home Inspections, and I pursued it. I went for the certification and courses and have been doing it ever since.

I noticed, compared to a lot of inspectors out there, you seem to have a lot of certifications.

I belong to an organization called Kamachi and am a certified master home inspector; this is the top designation they have. I’m certified to use infrared cameras and am going for air quality testing certification, too.

What is a home inspection?

I call it an unbiased visual examination of a property on a specific, chosen day. An inspection is when an inspector goes through on the same day with lots of equipment to test and view the home, but it’s only visual – we’re not going to rip down walls, etc. We have a lot of equipment and experience, but it’s only on a certain day. The closing date can happen two months later.

A lot can happen in that time. I know with my own home a lot has happened in two months.

Yes, indeed. Most homes will be the same on the day of the inspection, but sometimes something as simple as weather can be a factor.

[A question] that comes up with Matt’s and my clients is should I get a home inspection? Because the market has been so hot in these last few months and there are multiple offers, people need to make a quick decision and having a subject to a home inspection can be tough to pass. What are your thoughts?

I’ve done a lot of inspections before the offer is actually made. There’s the risk the offer won’t go through, but at least you’d have peace of mind.

So, a buyer sees a property on a weekend and knows the offer presentation is on Monday. They try to get their inspector in before the presentation so they can waive that condition?

Exactly. They would have already received the report. I make sure my reports come out the very same day and if I know there’s an offer being made that day, I ensure the report gets to my client before the offer is made.

So, you’re seeing a lot of these pre-inspections?

Quite a few. At least once or twice a week at minimum.

These home inspections can range from $300-400 up to $1,000 depending on the property size. So, people are out of pocket just to ensure their opportunity to compete.

That’s what the market is dictating and it’s the risk we run – if you find a good home and the inspection goes well, then clients can make a strong offer. At least they benefit from knowing what they’re getting into. So many properties, especially in the Vancouver area, that are from before 1980 come with a host of things to be aware of. We always hope that a purchased property is fine and no inspection is needed, but there are always a few I see each year that don’t turn out that way. We don’t find out until after the fact.

What are some things to consider when buying a house from before 1980?

A good thing to understand is that the way properties were built pre-1980 compared to today is different. Building code was different. Strategy of building science was different. Thoughts around how buildings are built were very different. So, the layout and design was different. Depending on if you’re buying a home to flip it or live in it can dictate what you want to fix. It’s easy to see and fix cosmetic items e.g. wall damage, but it’s the non-cosmetic items that usually sneak up on you.

And that’s interesting – a lot of buyers think upgrading paint, floors, and appliances are a great opportunity to make money.

That may work because the property will show better. If you’re trying to flip it within 60 days, fixing the walls and replacing appliances before putting it on the market might make it sell better and faster. However, whoever your buyer is may also get a home inspection – so, some of these things can come along again; they can’t be ignored all the time. For instance, with older properties from 1940-1950, it’s common to have a 60-amp surface as part of the electrical system, while most today have 100 amps. Not many insurance companies will insure properties that are 60 amps, so it’s an upgrade you may have to make to get property insurance.

Why would insurance companies have an issue with 60 amps?

It’s not so much the 60-amp surface itself as that just means you have less power, but it’s more so what that implies: knob and tube wiring which is an older style of electrical infrastructure. These wirings don’t have a grounding system, so in a lighting storm there would be no protection. Typically, there are old brittle wires which can be a fire hazard. A 60-amp surface is more symbolic of a larger issue in the electrical system. I’d ultimately recommend a home inspection, but it’s never inappropriate to ask questions. Asking if the electrical system has been updated can get you a lot of information.

We’ve covered electrical; what would be another example?

Plumbing. It seems over time if you’re buying a property, most are modified or changed in some way, not looking how they did originally. This often includes plumbing. I’ve seen drain lines installed upside down or leaking and old plumbing lines that need to be fixed, but they’re hard to see inside walls. Even copper can, over time, wear out and create pinhole leaks through joints and need to be fixed.

Which can be expensive, replumbing the house?

Yes, it’s not just plumbing and adding water lines. It’s also tearing open the wall for access, which adds more expense. You have to re-drywall, paint – sometimes these things don’t leak until they get used for awhile. As home inspectors, we have lots of equipment, we run and test faucets for quite a long time and see if anything gets generated, but there still needs to be awareness that old plumbing lines can be brittle.

You covered some issues with pre-1980s homes. Are there any others?

One of the big ones I often get asked about, with pre-1965 homes and subject-free offers, is oil tanks. They can be expensive over time. It was popular to use underground oil tanks for heating. Many properties have these left inside the ground, and over time they leak contents and contamination into the earth, which gets discovered today and can be costly to clean up. A very good question to ask with pre-1965 homes is if the property has an oil tank. I believe this must be disclosed?

Yes, on the property condition disclosure statement there’s a question about oil tanks. If a seller is aware of it, they need to disclose that fact. The challenge is many sellers are unaware. An oil tank scan often needs to be done. Someone comes with technical gear and they scan the property. In 2015, three separate properties I was dealing with had tanks on them. Fortunately, there were not huge costs for remediation (under $5,000). You need to ensure it’s brought up to code as per legislation, but the issue is if it does leak on your neighbour’s property, you’re at fault. There is a huge liability issue.

Yes, exactly. There’s a chain reaction to costs. Last year I saw an oil tank remediation which cost $80,000. It was a full oil tank in the earth that had not been emptied at all. For buyers of pre-1965 homes, the question should be asked. If the seller doesn’t know it is prudent to get an oil tank scan done, even in this market, and the same with an inspection. You get more peace of mind. Inspectors are certified to do the scan, and I’m familiar with what an oil tank looks like. I’ve caught some from these physical signs, but they can be hidden deep in the earth so you could need someone with specialized equipment to detect them.

I know they’re taking it a step further which costs more money, but you can get a geothermal scan of the earth now.

Yes, you can. For the cost, I recommend taking the best package so this situation doesn’t hang over you.

Any others?

Yes, I get asked a lot about asbestos. Asbestos is a mineral that when breathed into people’s lungs can cause mesothelioma. This is a disease that affects you much later in time, which is why it’s so dangerous. Asbestos is so prevalent because before 1980 it was used liberally in construction. After 1980, it was banned from residential construction, but some material still leeched through up to 1985 and even 1990 in rare cases. When [people are] buying an older property, I get asked about this a lot. Some material is known to maintain some degree of asbestos, for instance vermiculite which is a stone used to insulate attics. It was mined beside an asbestos mine and looks like kitty litter. Another example is duct tape used on insulating furnace ducts. Lots of materials don’t look like they contain asbestos at all but do, such as drywall, exterior construction material, roofing, paint – everything. Asbestos is only dangerous when it becomes airborne. It is usually inert, so there’s often nothing to do, e.g. in the attic, just leave it. If you’re thinking of renovating and tearing town walls though, it may become airborne and needs to be tested. This is a cost you have to understand and build into your estimation.

Removal and remediation and be a huge cost. When my clients go to sell, I ask if there’s vermiculite in the attic. If there is, we have to disclose that which can be a big challenge for the sale of the home. I’ve seen remediation jobs for vermiculite in the attic on houses that aren’t very big, and this can easily be $9,000-10,000: a huge cost. I’ve seen buyers find out when they’re demoing a house that there was asbestos, and you have to not only remediate but dispose of it. In BC, there are now tighter regulations for disposal of asbestos.

You’re right. If you’re not doing any renovations or exposing it to the air, it most likely will be fine. The key is when you’re thinking of renovating the cost for remediation comes into play. Many contractors will build a test cost into their estimates for pre-1980 properties. If you have buyers planning to remediate their own house, I highly encourage them to get a test too.

Over time a property gets modified and the structure changes: notches into joists or a change in layout. Everything can be fixed for a cost. I’m often asked if this is something we can deal with and my answer is you can fix anything, it just depends on how much you’re willing to spend. A good plan when buying an aged property is to have a reserve ready to go because most likely there will be something to fix.

It’s mind boggling – you take a house selling for $1.4 million and the buyers come up with 20% to avoid the CMHC insurance. Then they move into the house and have to deal with asbestos, plumbing and structural issues… there can be a whole host of challenges and an expensive process.

Yes, there can be. My recommendation to buyers is to have a contingency ready to go for repairs. There is always something that needs to be fixed. On one property I saw, the flue for the furnace (the chimney that goes to the outside) had been uncapped and modified so the exhaust was coming inside the house!

Especially in East Vancouver where I sell lots of homes, often the person who made the modifications wasn’t qualified to do so.

Yes, that happens. I get asked about permits too. As inspectors we don’t have the ability to look at permits, but we can tell if something was done properly or not.

Right, so you’re getting a professional opinion if something was done to code vs. spaghetti wiring.

Exactly. I see lots of spaghetti wiring!

How can people get a hold of you?

http://tricity.abuyerschoice.com/

604-880-0818

 

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