All too often property investors are lead by the nose by the friendly real estate agent who recommends them to an inspector who, in the expectation of receiving further referrals from that agent, will look for a soft option or solution to any problem that arises.
That inspector will not stand up on your behalf without fear or favour because of the risk of loosing future business from the agent.
The last example I came across was where the pest and building inspector either did not open all the sliding doors around the property or if he did so, didn’t make mention of it in his report.
When the investor took over ownership of the property, sure the sliding doors worked and, push come to shove, closed and sealed the property from the elements.
But when the owner engaged a specialist window contractor to provide what he thought would be a long overdue routine service to their shaky operation, the inspector advised that they had less than a year of life left and the whole of the eastern and northern frontage to the property comprising the windows would need to be replaced – Oops, a $15,000 cost.
If only the inspector had picked up on this item then the Buyer could have negotiated with the Seller for some reduction in the price. That opportunity was now lost.
When the property investor looked at the terms of the pest and building report again after settlement (to try and understand how all this could have happened) it was only then that he learned this hard lesson as a property investor.
That is, “Beware the Cheapies.
The explanation for all of this was simple.
To promote the engagement of the pest and building inspector recommended by the agent, that agent ingratiated himself with the investor by telling him that this inspector was “the cheapest one in town”.
The report the inspector provided reflected just that – it was a Tick Box Report i.e. all of the items in the house that he inspected were contained in a 1 page report, with one line per item and little or no space for comments.
The item dealing with windows was very general and did not mention sliding doors that doubled up as windows.[sam id=32 codes=’true’]
When challenged by the investor about why the major issue of the operation of the windows was not brought to his attention, the inspector simply pointed to the note at the bottom of the report that stated that “This report is for a fixed price and will deal only with the items noted above. If investigation on any other matter is required then additional fees will be payable and a written direction required to undertake this work.”
So the message is loud and clear, and twofold.
Never engage an inspector recommended by a real estate agent.
Source your own independent professional. Secondly, beware the low price Tick Box Reports. Look for an inspector who is “reassuringly expensive”.
Or if cash flow is an issue for you, as one of our infamous Federal Politicians says, “Just put it on credit card”.