28 Sep Most Home Buyers at Risk of Hidden Property Defects
Searching for the Perfect Home
Like many before her, Elaine Banoub was excited about buying her first home.
She just didn’t expect the process to take over a year and two rescinded contracts before it would actually happen.
The first property Banoub considered was perfect. It had been recently renovated and painted and was ready for a new tenant.
She signed a contract subject to pest and building inspection. Unfortunately, the inspection uncovered a high level of moisture. That made the home susceptible to mould and termite damage.
The next home Banoub considered had a number of additions and extensions implemented without council approval.
Disappointed, Banoub said, “None of us would have known” [about the issues]. “I used the reports to get my deposit back.”
The optimistic Banoub found a home in Ingleburn. She fell in love.
Of the new find, Banoub said, “The building and pest report said the roof needed restoration but it was 15 to 20 years old so that wasn’t unexpected.”
Some termite infestation was found in a tree which led to thermal imaging. Banoub smartly used the building and pest inspection reports and the thermal imaging to renegotiate the price.
Banoub ended up saving thousands of dollars.
Lack of a Professional Buidling Inspection: The Home Buyer Error
While it is always advised that prospective buyers have properties inspected, this practice is ignored by many.
They find inspections to be expensive especially when they are looking at and considering one property after another.
According to a report by Westpac Home Ownership, a large number of new homeowners who forego the inspection find significant issues with the home after moving in.
Almost 80 per cent of buyers rely on a system that includes running taps, checking roof conditions, ensuring light fixtures work and looking inside closets as the ideal way to evaluate a property’s condition.
Westpac says only 39 per cent of home shoppers use inspections to assess a property’s worth.
According to Andrew Moore, Westpac state general manager NSW Metro, the other 60+ per cent are missing out on an invaluable opportunity.
“A professional property inspection will give you a much better understanding of what repairs, if any, may be required, and will help you decide on a property that fits within your budget, while minimising unexpected costs after moving in.”
Moore adds, “Other states are even less cautious, with only 25 per cent of Victorian home owners conducting a building inspection before buying, and only 28 per cent of South Australian home owners.”
NSW shoppers are most likely to utilise professional inspections with 43 percent purchasing a professional report.
Why Should We Get Building and Pest Inspections?
As stated, the cost of inspections – especially as one considers various homes – is a major deterrent.
Todd Hunter, a buyer’s agent at Wheregroup, says,
“In competitive markets like Sydney and Melbourne, [a buyer] might get sick of paying for it.”
Still, Moore believes even at up to $500 per report, inspections are still an advantage to the home buyer who could end up with a property that requires a fortune in hidden repairs.
He notes the buyer who discovered they had a specific breed of Queensland termite known for eating through homes in months.
The infestation was so severe, the home was unlivable.
Despite the fact, on the surface, the home “looked fine,” it needed “demolition, not a repair job and it was only 10 years old.” Hunter says, “Reports should still be done. There’s often a big list of little things that aren’t right, even in a property that’s two years old.”
While many shoppers see professional inspections as throwing money out the window, the fact is it could eventually save them thousands of dollars in repairs or from buying the wrong home.
Ray White Brunswick director Jamil Allouche says, “Unfortunately there are a portion of home owners who try and cover up serious structural issues when selling their home, and some home buyers, specifically first home buyers, can be misled.”
There are some real estate agencies offering inspection reports with the home. NSW real estate agents are now obligated to manage a disclosure log containing information about building and pest, contract or strata review reports of a property they are marketing.
There is also some chatter about making building and pest inspections a mandatory compliance within the sales contract.