Whether to engage a building inspector or not provides many buyers with a quandary, but a building inspector can potentially save you tens of thousands.
Lets take a closer look at our potential property saviours.
Looks can be deceptive, there’s no doubt about that, and for some people that deception can end up costing a lot of money.
When it comes to viewing a property, there’s only so much we ‘lay people’ can deduce about, say, how structurally sound it is or what critters might have taken up residence in the woodwork.
Which is where the building inspector comes in – but exactly what are they made of?
Building consultant and architect Jerry Tyrell has been on building sites since his late teens.
“I just got involved in all areas of the forensic side,” he explains.
“I was interested in better quality building and better quality practices and then I had friends ask me to look at their buildings and I realised there was no science to it.
So I started to develop a taxonomy for building defects, which sounds terribly boring but it floated my boat!
“I quite like the idea of there being a science… a strong methodology for the inspection of buildings.”
Tyrell describes inspecting buildings as “a profiling exercise”.
“We profile a building like we profile a person,” he says.
“We look at the suburb, at the topography, the age of the building, the type of construction, the calibre of the work that’s in front of us, and then try and drill down on a very complex check sheet to identify the statistics.”
He’s keen to point out that a good building inspector tries not to overdramatise or call out things that don’t matter.
“We try and identify the things that are going to affect use, value or resale; they’re our basic benchmarks”.
A common complaint about building and pest reports is their size.
Many reports he comes across “read like a thriller novel, even where there’s nothing wrong… they’re full of disclaimers”.
“It doesn’t need to be three pages of meaningless disclaimers and a lot of descriptive waffle.”
“It has timber windows,’ ‘It has a driveway.’ ‘It’s two storeys’.
They’re just irrelevant.
Many reports contain that level of trivial content that in fact makes people feel comfortable but doesn’t inform them.”
One way to counter the issue, Tyrell believes, is for inspectors to also offer helpful advice.
While some inspectors, he says, will simply describe an issue, a better one will go further.
“We increasingly go to remedy-based comment.
If we can, we’ll say ‘this is what you need to do’ if we think it’s something people need to note.
We might just say ‘water damage at aged kitchen bench joint… but it’s 30 years old’.
We won’t recommend replacing it because that would be irresponsible… it’s unfair on the seller.”
Professional engineer Paul Antonelli started Resicert Property Inspections more than five years ago.
His background in property and engineering ensured it was a good fit, he says.
“It enabled me to be engaged in my local area working with other real estate professionals helping people with one of their most important purchases – property.”
Antonelli believes inspections are invaluable to buyers for many reasons.
“When purchasing an existing property,” he says, “it’s important to understand that you’re buying the property in an as-is condition.
In essence, it’s no different to a second-hand car purchase.
You’d expect that, for a second-hand vehicle, the condition of the tyres, seating, paintwork, etc., may not be to the same standards as a new car.
It’s the same for an existing property.
Often buyers don’t understand this and have unrealistic expectations of what the vendor is required to fix and upgrade as part of the sale process.”
Without a thorough inspection, he says, it’s isn’t possible for the buyer to fully understand the condition of the property, whether there are any defects or structural issues, and what maintenance items you should be aware of that my need attention.
“While these may not be issues that the vendor necessarily has to rectify, it’s still important that you’re aware of the full range of information relating to the property.”
And, of course, sometimes that knowledge can knock thousands off a property price.
He recalls a scenario in which a client came out smiling.
“A recent property bought by a client was a four-bedroom character home.
The building and pest report uncovered lots of small maintenance issues, so we asked for $17,000 off the asking price, and managed to get $11,000 off,” he says.
Director of BestWest Building, Mark Lewer has seen a number of cases of clients saving substantial sums, including one that informed him she’d managed to get the price of a house reduced by $12,500 because of defects in the garage uncovered during an inspection.
“At another property,” he says, “there was significant subsidence on the house and when I went to enter the roof space I found a load of broken asbestos where the old roof sheets had been replaced but asbestos debris hadn’t been cleared.
A quote for all of the remedial work including structural repair came to $80,000.
The property value was only in the $600,000 range, so this was a huge amount and the owner wasn’t prepared to discount or have the work carried out.
“It was more trouble than my FIFO buyer wanted and with the use of his due diligence clause he was able to withdraw.”
That clause is another key element in the house inspection process, according to Lewer.
“It’s a big deal, it really is. Buyers should have a clause such that they can have a building inspection to their satisfaction or write in a 12-day due diligence clause, where you have 12 days to carry out due diligence at the property.
“If it doesn’t reach your satisfaction, you can give them a notice to terminate.
That’s the way I always deal with it, on my own building inspections.”
TO INSPECT OR NOT?
As professionals in the business, it’s perhaps not surprising to hear that all three of our inspectors believe inspections before buying a property are a no-brainer.
And their reasons make for a convincing argument.
“People walk through on a Saturday morning and it’s got a fresh lick of paint or there are fresh flowers out on the tables and they think ‘Ooh yes, this is lovely,” Lewer says.
“They don’t look at the roof frame, they don’t look at the roof exterior.
“They have no idea about the damp wall behind the shower, the sagging ceiling they hadn’t noticed… the list is potentially endless.”
Tyrell explains just how much you’re getting for your money when you book in that inspection.
“Even though we’re quite well qualified, we’ll crawl the roof interior, we’ll crawl the subfloor, we’ll get up on available roofs, we’ll get up on the ladders. The subfloor is a treasure trove of things one you’ve seen inside.
“We like to do our job thoroughly. It’s like when you meet a person, you’ll make a judgement call on that person, probably your instinct will call it immediately, and then you’ll reason through it, but it may take you hours, days, years to really understand that person.”
Antonelli concurs. “Due to buyer’s emotional involvements in the purchase, minimal time to view the property and inability to fully access all components of the property, it just makes sense to get comprehensive inspections undertaken.
“It’s the areas that you can’t see that are essential to get inspected.
An example of an issue in the internal roof space that could otherwise be missed is air conditioning ductwork that’s opened up or separated. That would have an ongoing impact on the performance of the air conditioning unit undetected.”
When it comes to worst-case scenarios, our inspectors have seen some sights.
“We’ve seen the best, we’ve seen the worst,” Tyrell says.
“I’ve seen end terraces where the end wall leans, I’ve seen Victoria buildings with turrets and complex joinery that’s exquisitely made but hasn’t been maintained for 85 to 90 years so everything’s rusting and damaged.
“I’ve seen drainage cut out from underneath, so all the pipes went through the floor.
I went into a cobweb-infested subfloor and there was no drainage underneath the bathrooms and kitchen, it’d been cut out. Water just went into the subfloor!
“Probably the number one thing in the last 15 years has been leaking balconies because of the inability of the government and the industry bodies to identify best practice to get your window thresholds to drain and your balconies not to leak.”
For Antonelli, the cracks were clearly showing.
“There was a brick home on concrete foundations that had some telling cracks in the external walls.
That’s not always an indication of an issue but in this case, there was some evidence that work was required to stabilise the ground under the slab.” Said work was going to be an expensive exercise, which enabled the purchaser to renegotiate the contract.
“Sometimes homeowners are keen to save some money and have a go at doing their own electrical work,” he goes on.
“Not only is it illegal but it can result in dangerous situations. In one particular home, there was extensive replacement of wiring within the roof space that needed replacing by a qualified electrician.
The work was under taken and the sale proceeded but this saved the buyer considerable issues down the track.”
Lewer, too, has seen his fair share of oddities – from houses that have been converted into drug labs to dodgy goings-on up high.
“Insulation in the roof space – normal you say? “
It was still in the original packing bags, tucked neatly in one corner, years later.
Then the ere was the timber deck that had actually been built on the metal roof – no railings, great view!”
Of course, problems aren’t always seller cover-ups, Antonelli points out.
They might have purchased the property without a building inspection themselves and inherited the problem.
And there are plenty of problems to be found when it comes to housing.
…“Also, the pool had considerable leakage, so that needed to be completely emptied, resealed and retiled, and the house had considerable roof leaks, which had damaged ceilings and plasterwork.
Rebecca and Dan were so disappointed to find out the agent had told them the property was in good order, when in fact it needed to be demolished. It later sold for $250,000 over reserve to an unsuspecting homeowner who didn’t get a building inspection.
The questionable ethics involved in the latter sale is something many it the industry feel strongly about, as well as the lack of national regulatory body.
Tyrell says: “I think the lack of a consistent professional body across Australia, with clear guidelines – like the engineering fraternity and the accounting fraternity, where you’ve got clear regimes and disciplines – I think it’s a major problem.
It’s a hot topic for Lewer, too.
“There’s an Australian Standard for Building Inspections, AS4349. The requirement in the standard is that the inspection is carried out by a ‘competent person’.
“Clearly this is very much open to interpretation and there are many inferior inspection services being carried out by inexperienced, unqualified inspectors. I always recommend that consumers ensure their inspections are carried out by a registered builder, who has satisfied the Building Commission of his/her overall building experience.
“That doesn’t guarantee a good service, however. Unfortunately, even some of the so-called qualified inspectors are less than satisfactory.“Plus, even a good pre-purchase building inspection report is constrained by the wording of the building inspection clause in the Contract of Sale, which is very significant for the buyer and seller.”
It does seem as though a body overseeing the practice of house inspections would make good sense. After all, as Antonelli reminds us, the reports themselves don’t necessarily put buyers off, so thorough reporting isn’t something to be wary of.
“In our experience, buyers aren’t put off a sale necessarily by this issue, but more wonder how it has been managed and communicated. Sometimes they become suspicious – ‘What else could be there?’
“Most buyers are realistic and understand that an older property won’t be perfect and has been priced accordingly, so the more information on it, the quicker a buyer can get comfortable with the property and exactly what they’re buying.
The Danger Signs
Some common causes of serious value loss in properties include:
- Termite damage.
- Structural issues and modifications.
- Illegal and unapproved structures not built to required standards.
- Soil settlement resulting in foundation issues.
CONTRACTS ARE KEY
When it comes to the law, ethics aside, it’s generally a case of caveat emptor (buyer beware).
Contracts are key and, with this in mind, Paul Antonelli points out some things to remember.
- Ensure you understand contract and, if required, get professional assistance or input.
- Always include a building and timber pest inspection clause whenever you purchase an existing property.
- Make sure that the clause included in the contract provides you with enough time to organise the inspections and be able to review the reports – the minimum period recommended is seven days.
- Ensure the clause itself is appropriate and entitles you to specific actions, depending on the outcomes of the inspections. For example, if a structural defect is found in the property you have the right to request the seller to rectify, choose not to proceed, or be compensated accordingly.
- It’s essential that it’s carried out in accordance with the relevant Australian Standard AS4349.1.
This article was written by Angela Young and was originally published in Australian Property Investor Magaine and has been republished with their permission
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