To the ordinary eye, it might look like an overkill to conduct a building inspection on a property you’re about to make an offer on, but it should be treated as a non-negotiable. After all, buying properties is a big financial undertaking that you certainly wouldn’t want to leave to chance!
Of course, building and pest inspection reports are valuable tools for property investors as it helps them uncover everything about an estate, from minor cosmetic damage to major structural problems. Usually, the inspection is conducted to help buyers negotiate purchase prices down but what if the property in question is one that is up for auction?
Typical Building and Pest Inspections
In standard private treaties, these assessments have to be done prior to one entering a property purchase contract. It isn’t always the case, however. One of those cases is when the property is in high demand and the vendor is looking for a fast sale. It’s highly likely that the limited timeframe and tricky circumstance will restrict an opportunity to conduct the said inspections. You may, however, add building and pest inspection as a condition of the contract. From there, a solicitor can check the wording of the clause to ensure legibility.
It may be an entirely different process when you’re getting a property through an auction, though.
Purchasing a property can be done through either process and going for either of the two will make a difference in terms of when you can do the building inspection.
A private treaty means a private sale where buyers make an offer and if the seller is amenable to it, he or she will accept it and they proceed with finalising contracts, performing building inspections, and arranging funding. It isn’t a straightforward process, however. With the vendor and buyer going back and forth on the sale contract details, a lot of these private treaties can carry on for weeks before the actual sale.
A much quicker option is selling an estate by way of an auction, which often takes less time than a private treaty sale. Although the buying process is swifter, there will still be twists and turns that can potentially delay the sale contract further. Even if you have conducted a property inspection on an auctioned house, there is a good chance you’ll lose the bidding and render your efforts futile.
Building Inspections for Auctioned Properties
It is the unique protocols surrounding auctions that makes it crucial for buyers to commission a building inspection before auction day. Remember, access won’t be provided again until after the settlement is complete and the property in question is already yours.
If you think it’s okay to skip the building and termite inspection, think again. It’s a significant gamble because buyers who are successful under the hammer make a non-negotiable commitment to purchase the property. No cooling off period or post-auction negotiation to serve as your safety net once you win the bid. It wouldn’t be far-fetched to think that you’d be putting yourself in a difficult position when you realise that the house auctioned off to you has substantial faults throughout and you can no longer negotiate for a lower price for it.
It’s worth mentioning that property vendors are under no legal obligation to disclose building faults before the auction. This means that if you refuse to get a building inspection done before the auction, it’ll be taken that you automatically accept any undisclosed defects in the property in question once you win the bidding.
To put it simply: the timing of the property inspection will be critical when you don’t want to end up forking out for a building that’s likely to disappoint you in the end. Even if you feel like you really need to purchase the said asset for whatever reason, getting an independent building and pest report before placing bids will save you from unexpected costs down the track.
Why a Pre-Auction Building Inspection Makes Financial Sense
As a buyer, you naturally want to know what you’re getting for the amount you just spent. In real estate, the same principle applies and that’s why inspecting a property that is about to be auctioned will make perfect sense.
An independent inspection will give you a good idea of the actual condition of the estate being auctioned. In the end, it’s all about getting a good idea of what you’re getting if you bid for it. Making an informed decision is crucial for such a massive investment, after all. No matter how tempting the property is, the assessment will give you better chances of weighing whether to bid on the building or not. Will it be a worthwhile gamble or will it only be a source of frustration?
As defined in AS4349.1 – 2007 3.2.1, the inspector will inspect the following areas (as a minimum) whenever a safe and reasonable access exists:
- Roof space
- Sub-floor space
- Area within 30 meters of the building in question
- Building interior
- Building exterior
- Roof exterior
As prescribed in AS4349.1 – 2007 3.3, the building inspectors will look for these faults and defects:
- Distortion, warping, or twisting – an element or elements of certain features have moved from the intended location or grown distorted
- Rusting, rotting, decay, or corrosion – a component of a feature or fixture is visibly deteriorating
- Damage – a fabric or material of a certain part of the property has ruptured or broken
- Water penetration – Moisture can be observed in locations where they’re not supposed to be
- Operational – fixtures or systems have components that don’t function as intended
- Installations – features or systems exhibit signs of ineffective installation and usage, even missing components
All in all, the building inspection aims to assess the condition of the auctioned property and record any factual observations in a report.
A lot of investors who buy buildings through an auction often make the mistake of going into the whole thing blindfolded. Many will go in and make a bid without commissioning a report to assess the actual state and condition of the house being put up for grabs.
Naturally, this uninformed decision will lead to bigger headaches once the property defects and issues start to surface. And while some get lucky with their bids, you don’t want to risk too much when it comes to such a substantial investment. Be wise and carry out a building and pest inspection before you bid for a prospect estate.
To give you a hand in this tricky situation, call our team and we’ll quickly make a building inspection report that can ultimately aid in protecting your financial endeavour.