Pest and Building inspection- negotiate a discount

That sounds pretty reasonable.
If you've already negotiated a discount, it would be argued that if you find anything extra, that's on you.
$ to % don't really translate because of the large disparity between locations and house prices, but for instance if you did your own inspections and based on that, negotiated a $12k discount. After further professional inspections and quotes, the total for repairs was closer to $24k (double the original estimate), there's nothing stopping you asking for a further price reduction. They don't have to say yes. It doesn't hurt to ask.

 

And if you have a decent solicitor/conveyancer, you don't even have to negotiate directly yourself, they will send the request to the seller's legal representative.

 

If its not a really hot market then I would definitely pull apart each item of 'concern' and make some phone calls to see how much to fix, replace etc. I would then let the agent know your 'serious concerns' and offer a reduced amount based on the findings. Your negotiations can determine a reduced amount.

From an investors standpoint, B&P (unless there is serious structural issues) is a great negotiating tool for a price reduced. Once your under contract a few things usually happens in my experience. 1. your in a stronger position than the vendor, 2. the vendor is even more emotionally involved and committed at this point, 3. They know you can pull out with the clause and they are worried that others may do the same. Having to concede 10-20k (when a report comes back with issues) is often absorbed by vendors because their need of certainty and closing the deal is much stronger than it is for an experienced investor. From personal experience I've saved enough in B&P over the years to make up 6 figures. No laughing matter.

 

"subject to" means "the contract will proceed - on the agreed terms, including price - provided the B&P is satisfactory". It doesn't mean "Price TBA".

If you want the price to be dependent on what you find in the B&P, then you should have it performed prior to agreeing a price and signing a contract.

 

You can interpret it any way you like, I'm not here to debate the wording or it's meaning. It's the way it happens currently, I'll follow it as best I can.
I know people are not meant to get emotionally attached when buying, and I can understand that it may be difficult to do that as a seller, especially if it was your PPOR.
If there's nothing wrong with the house, there's no problem.

 

That's its legal meaning, which - as it's a contract, is the only one that's relevant, I would think.

My advice to any sellers is to respond to requests for a discount with: "Is the building & pest condition satisfied or do you wish to terminate?"

Legally, this is the only issue that is relevant with regards to a building and pest clause.

I maintain that it is highly unethical to attempt to use items in a building and pest - unless they are outside the anticipated scope for a house of that age and (evident) condition - to attempt to reopen negotiations that have been completed.

 

Developers can deliberately "go slow" on OTP developments in rising markets in order to crash purchase contracts and on-sell at a higher price.

Buyers can manufacture a false refusal to invoke a finance clause.

It doesn't mean they're ethical things to do.

 

That's all good. If people are able to come to an understanding with issues picked up in the B&P legally, it's just semantics. Just following the rules, not what someone reckons

What would be your advice to buyers?

 

Assume that the property has problems you have to fix, and allow for it (plus a margin) when negotiating your purchase price. Then present it as a positive of your offer that "I know many buyers try to use the B&P to try to drive price down. I think it's an unethical practice and I won't do that; I will use the B&P as it's intended: to either confirm my decision to proceed at the agreed price, or - in the unanticipated scenario where there are major problems - to terminate."

Or have your B&P done prior to making an offer, and make an offer without a B&P conditon.

 

No disrespect to anyone just my opinion.

Simple fact is sellers will try to get as much as they can for a property and buyers will try to pay as little as possible. Both parties and their representatives will usually try every trick in the book to get what's best. I don't see this as unethical. It's just business. If anyone thinks sellers are also looking out for the buyers interests....ahh......then that's an interesting supposition.

 

That's true, it goes both ways depending on the state of that particular market. In a quiet market buyers are going to have a better time achieving a reduction in purchase price. In a hot market sellers will have buyers competing against each other, even allowing - if not encouraging -'gazumping' in states where it's still legal.
What's worse, getting gazumped when you think you've bought a house or as a seller having someone ask for a price reduction that you don't have to say yes to?

 

c. Murdering somebody, or
d. All are unethical.

 

Thanks, but of all the books that I've read, not one of them advised to do it that way.

 

Agree. And not just that, its simply bad strategy to ignore B&P as a legitimate cause for a price reduction, imo. Remember, we are professional investors, not just buyers. Investors can make a choice about where the ethical line is for them. For me, its not even close. I'm sure many others feel the same way although I doubt we'll see their posts.

 

Why sign a contract agreeing to pay a price that you have no intention of paying, when the vendors have, in return, agreed to take the property off the market for you? You don't consider that unethical?

 

Hi Perp,

When I sign a deal on a property subject to B&P for an agreed amount, I am more than happy to pay the amount agreed if B&P comes back fine. I'm not talking about very minor stuff such as too many leaves close to a wall which can cause moisture damage etc. I agree that's silly and I wouldn't ask for a reduction on that. But there are legitimate things that often come back such as electrical problems, plumbing problems, termite issues etc. To me, those are legitimate reasons to argue for a price reduction and is more than fair.

You could say to do a B&P before signing a contract, in which case someone else could easily sign the contract before me and my B&P money is wasted. Do you think the seller would care about that?

I respect your views on the ethical issues. On this particular topic I just happen to disagree, that's all.

 

What are your thoughts on offering an 'unconditional' offer - and then using the cooling off period to get a B&P etc... anyway?
https://propertychat.com.au/community/threads/what-are-your-contract-conditions.1442/

 

That is your take on it. If items come up in the B&P that a lay person would not pick up on then the basis on which you made your decision to buy the property on that price are then no longer valid.. Value proposition.

If a vendor accepts an offer subject to a B&P clause in the contract and are not prepared to negotiate based on an outcome of the report then they should not have accepted the condition.

Comes down to supply and demand of WILLING buyers and sellers. If vendor is not happy and see it as having their arm twisted then they can say "no" to a price reduction, buyer either sucks it up or crashes the contract. Vendor moves on to another potential buyer. The market takes care of the rest. If there is no other buyers then that is what the property is worth..

On inspection I take into account repairs needed to be undertaken, this is often reflected in the offer price or the advertised price.
I'm not an engineer, or a qualified builder... What do I know other than cosmetic items?
B&P protects me. (Possibly alerts vendor to any issues they were not aware of either).
Because the vendor agreed to the condition in the contract.
Agent is playing games pressuring a potential buyer to secure the desired price.
So I don't think buyers enter into contracts with this condition to swindle vendors. But just as agents milk another 5-10K out of the buyer, if any unforeseen issues are found in B&P the buyer can then claw some of this back.

I understand what you are saying here and it is a morally correct thing.
But im not going to offer "overs" on a property on the contingency it will need repairs.
It is worth what it is worth NOW, not what it could be.
It is simple economics. Supply/demand - willing buyers and sellers.
Sometimes in moving markets its not possible to have B&P done prior to submitting an offer. (Maybe in TAS lol).
Again if vendors are confident in property in moving market, say no to B&P clause, subject to finance clause. You want it you take it...

 

Can you get B&P inspection done before cooling off period ends....???
I wouldn't want to corner myself and put unnecessary pressure on myself like that.
B&P clause is usually acceptable in a contract. More so if your finance position is strong.
If you are worried about that and you have finance pre-approved you may include the B&P clause and for finance, just put subject to bank val..