FOREWARNED IS FOREARMED: WHY PRE-PURCHASE BUILDING INSPECTIONS ARE ESSENTIAL FOR AUSTRALIAN HOME BUYERS

For many, going to an open inspection when you want to buy a home to live in, is a very exciting time.  The owners and real estate agents have set everything up “just so” and you have a short amount of time to imagine yourself living in the space and likely have your own criteria you are looking for.
 
There are so many things you won’t see at that inspection, though and that’s where considering having a pre-purchase building inspection comes in.  You may be about to make life’s biggest purchase, and in Australia, “buyer beware” (caveat emptor in Latin) is key in the property market.  If you do purchase the property, the property conveyancer will do some important searches. Additionally, you can hire someone to do a pre-purchase building inspection.  You might not want to hire just anyone as there are growing reports of buyers discovering defects despite having inspections.  However, there’s another Latin saying, praemonitus, praemunitus, which you may have heard in English as “Forewarned is forearmed.” 

What is a Pre-Purchase Building Inspection?

In simple terms, it’s an inspection, paid for by you, by a professional who will check for things like structural defects, leaks, rising damp, and pest issues.  In some places, the pest inspections are carried out separately.  Expect to pay between $200 – $700, and when you consider how much money this might save you if it turns out there are thousands of dollars of repairs needed, you may consider it to be well worth it.
 
Pre-Purchase building inspections can also help in price negotiations and form contract conditions. You, the buyer, make it a condition of the sale contract that you must be happy with the results of the inspection before the sale is finalised.

Current State-by-State Differences

An interesting thing about them is that building inspections are not required in all states and territories. There are also different requirements for new construction vs. existing homes, here’s a list of some current differences:

• Queensland: Only state requiring licensed residential building inspectors
• ACT: Mandates building and pest inspection reports before sale

Most other states: Recommendations only, no licensing requirements

• New South Wales
• Western Australia
• South Australia
• Victoria
• Northern Territory
• Tasmania: Vendor disclosure not required.

The Quality Control Issue

There is a lack of minimum standards in most places, and one thing to watch out for are issues with real estate agent-arranged inspections or the builder / developer.  It may look like an inexpensive alternative, but consider who the inspector is really working for – you, or the agent who wants to make the sale?

What to Look for in a Building Inspector

• Relevant qualifications (building surveyor, registered builder)
• Professional indemnity insurance coverage
• Experience and track record
• Adherence to Australian Standard AS 4349.1-2007
• Independence from the selling agent

When and How to Arrange Inspections

So, when and how could you arrange inspections?  We suggest where at all possible, do it before you sign contracts.  Alternatively, have a building and pest clause as a contract condition.  Remember, it’s important to act reasonably in negotiations and understand your rights and limitations.

Making the Most of Your Investment

When searching for that perfect home, you will have multiple property visits where you’re doing your own personal inspections.  You can ask at these inspections about any special considerations – such as if the house has asbestos, is in a bushfire zone or has any illegal renovations.  It will likely only be a few that go to the stage of wanting to put in an offer and arrange for a professional inspection, as a complement to, not a replacement for, the work your conveyancer will do.

Key takeaways:

• Consider getting a pre-purchase independent inspection for any property sale
• Don’t rely solely on vendor provided reports
• Verify the inspectors credentials and insurance
• Understand the contract condition and your rights