By Munro Donen, Director & Principal, Propertybuyer East propertybuyer.com.au
The basics of buying a property are reasonably simple. The challenge is getting the most favourable overall result from the buying process. For example, price is important but often the best outcomes relate to the contract’s conditions. By using contract conditions to your advantage, it’s possible to make your offer more attractive than others, particularly in a competitive market.
Reducing risk when buying a home is imperative. It’s likely to be the most expensive purchase you make in your life. A home’s structural integrity is paramount, because repairing or rebuilding part of a property can cost tens of thousands of dollars, or even more.
Warning! Property buyers may purchase a building and pest report provided by the agent or vendor. Whilst this may seem to be a good strategy, it can also expose buyers to a risk with potentially severe financial implications.
Building and pest reports that have been prepared for a seller and then made available to potential buyers may not be detailed enough. Even when prepared by a licenced professional they can be lacking detail.
From personal experience I know there are many disclaimers in these reports and they can be very basic.
I always recommended to my buyers to commission an independent report. It must be prepared by a fully licenced and highly qualified inspector and must be comprehensive and detailed.
We have extensive connections with trusted specialists who do building and pest inspections. Please reach out to me for a referral to a trusted professional.
Recently I was purchasing a house for a client in Paddington, Sydney. Given my experience with homes of this era, I’m familiar with expected defects and issues that these ageing terraces present. These grand homes are old and often present with rising damp, leaks, ancient plumbing and all sorts of other problems. My client was considering buying the inexpensive vendor-supplied building and pest report to save them time and the cost of commissioning their own report.
I strongly recommended that we obtain an independent report which cost circa $600, and whilst my client was initially reticent to spend this additional money, they eventually went with my recommendation. That more detailed report uncovered that the roof in this 100-year-old property should have been replaced about 60 years ago, however it had simply been patched up over the years. Whilst the building inspector couldn’t tell us exactly how much it would cost to remedy the problem, he said there wouldn’t be much change out of $80,000. Proving a point and saving our client in excess of $80,000, my recommendation was to walk away from the property, which was a unanimous decision. Don’t scrimp on this vital step, because saving some dollars on the report’s fee could end up costing you tens-of-thousands in repairs.
The example above clearly proves that the small investment of getting your own independently commissioned building and pest inspection by a licenced professional answering directly to you is absolutely imperative.
There are several ways you can use this to your advantage.
Firstly, if the building report shows that the home has severe problems requiring costly rectification, you can decide not to purchase just like we did.
Another way is to use this report advantageously during negotiations. A detailed report may uncover rectifiable defects and provide an estimate of cost to repair them. Armed with this information, you can negotiate with the seller or agent for a discount on the price. And of course, if you have building skills yourself and are able to fix a property for less, that’s a bonus.
Alternatively, you can negotiate to have the defect rectified to your satisfaction before settlement by the seller. Your solicitor needs to include this in the contract of sale. This removes the risk of possible cost blowouts, mitigating your risk.
This said, not all properties require a building inspection. If your plans are to demolish or change the property through major remodelling or extending, a building report on the home’s original condition might not be useful. In these situations, waiving a building inspection may give you a competitive advantage over other buyers.
This needs to be carefully considered on a case-by-case basis.
A building inspector’s report is essential for managing risk and ensuring you don’t overpay for a property or buy a lemon.
To have one of the friendly Propertybuyer Buyers' Agents to contact you:
call us on 1300 655 615 today.