Join Australia's most dynamic and respected property investment community

Purchase inspections and Auctions

Discussion in 'The Buying & Selling Process' started by Ghoti, 29th Jul, 2016.

  1. Ghoti

    Ghoti Well-Known Member

    Joined:
    10th Jun, 2016
    Posts:
    124
    Location:
    Melbourne
    Hi PC'ers,

    Given the importance of having a pest & building inspection before locking in a purchase, what's your approach for auctions?
    Don't do them as competition may force up prices? (different story if no bids :) )
    Do a B&P before the auction, accepting risk of signaling your intentions and property price exceeding budget?
    Just do a really thorough DIY inspection during opens and take the risk on B&P?


    Cheers,
    Scott
     
    Jasmine likes this.
  2. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,568
    Location:
    Melbourne, Australia
    Your choice at the end of the day.

    However as you are from Melbourne, asking for a S32 shows you have a heighten level of interest in the property. As soon as you raise your hand on auction day the agent and the vendor can clearly see you have interest.

    I do B&P before auctions but I have to be serious about bidding not, oh I like it but I feel it will go for to much or I don't like how it has/doesn't have x.

    If you are comfortable in taking the risk of not spending a couple hundred and the property may have some serious issues which may cost you $x0,000s of dollars to repair then go ahead.

    Unless you are a builder you really should look at doing the B&P. Even just recently there is a property which we have an offer on, my father, mother, grandfather and brother in law all inspected a property and said it all looks good. We still put in a B&P clause and there appears to be about $50,000 worth of repairs. Now my grandfather has built houses before and my parents own about a dozen property including on in the neighboring suburb. Yet no one picked up these issues except a building inspector who does this as a job.

    So my $500 for inspections has either saved me from buying or about $50,000 in costs and/or a whole load of heartache.

    Would I have done a B&P before if it was going to auction, yes because I would hate to have won it with a 50k repair bill waiting to happen (or more if I didn't action it).
     
    Blue Cat, sleekgeek and Ghoti like this.
  3. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    If I was going to bid, I would get a B&P report done beforehand.
    They're going to work out you intend to bid at some point.
     
  4. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    925
    Location:
    Qld
    Our son bought at auction in Melbourne. $1m+. Seven registered and active bidders, only son and one other did B&P inspections.
    Maybe not a Melbourne thing?
    Marg
     
  5. Ghoti

    Ghoti Well-Known Member

    Joined:
    10th Jun, 2016
    Posts:
    124
    Location:
    Melbourne
    Thanks all. First IP and I think I am looking for excuses!

    The property appears sound outside and of good quality. Inside badly needs paint, carpet and Id say kitchen and bathroom need updating. Consistent with my add value plan.

    Yep...once the hand goes up the cards are on the table. I'll organise a B&P inspection.

    Cheers,
    Scott
     
  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,151
    Location:
    Canberra and Sydney
    Where are you looking to bid?

    In Canberra for instance - it's mandatory for the inspections to be made available when the property is listed.

    If it were me - I'd personally fork out the cash.

    Cheers

    Jamie
     
    Ghoti likes this.
  7. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Does that mean the vendors get the inspections done and make them available?
     
  8. Ghoti

    Ghoti Well-Known Member

    Joined:
    10th Jun, 2016
    Posts:
    124
    Location:
    Melbourne


    Melbourne. In Vic its up to the purchasers to satisfy themselves what condition the property is in.
     
  9. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,151
    Location:
    Canberra and Sydney
    It does.

    It might sound like a conflict of interest - "why would I believe a report that was commissioned by the vendor" - but in reality, there's only a few companies down here that provide these reports and all are quite professional/unbiased from my experiences.

    The buyer ultimately pays at the end though - they have to reimburse the vendor for the purchase of the reports at settlement.

    Cheers

    Jamie
     
    mcarthur likes this.
  10. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,568
    Location:
    Melbourne, Australia
    The same as getting a road worthy certificate for cars, you can trust the owner's road worthy or you go commission your own.

    I like the ACT way of doing it but people have a stigma that the vendor's report will not include anything damaging. However a building inspector is licenced and they would not risk their livelihood by not reporting an issue just so the vendor could get an extra 20k. If a building inspector was to not include some major detail in their report the vendor would have to make it attractive enough ($$$) for him not to include it.. These dollars would not make it feasible as the vendor would likely have to pay the building inspector for his annual income until retirement... It isn't going to happen.

    End of the day even with the building report you can still commission your own inspector to be double sure.
     
    Ghoti and mcarthur like this.
  11. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    That's interesting.
    I guess if they got a bad one, they could get another one.
     
  12. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    925
    Location:
    Qld
    If we ever sell our PPOR I plan to get a B&P just so I know of any issues before the drama of a contract surprise.
    Marg
     
  13. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    902
    Location:
    Melbourne
    Depends a lot on the property. eg a building less than 5 years old with no obvious flaws is probably a relatively safe bet. Even safer bet if it is an apartment of that sort of age.

    The Y-man
     
  14. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    902
    Location:
    Melbourne
    One big danger for doing B&P for auction is the psychological one. Because you did the B&P, you can be more "invested" in the property, and might tempt you to go over your limit (especially if the report came back clean). You can also start piling on costs - eg you might get B&P on 10 properties at various times, 4 of which come back bad, 6 of which you bid for and all fall through.

    The Y-man
     
  15. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    That seems like a good idea too.
    But I would hope to know of any issues before that.
     
  16. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    925
    Location:
    Qld
    True, but we have known of surprises being uncovered.
    Better to find out beforehand than in the emotion of a threatened contract collapse.
    Marg
     
  17. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    925
    Location:
    Qld
    This house was around 30 years old. Yes, everything looked fine, and in fact it passed inspection with flying colours.
    Marg
     
  18. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    That is true as well, but I would like to be aware of any issues with a house I lived in.
    IP might not be on top of it as much, especially interstate.
     
  19. Ghoti

    Ghoti Well-Known Member

    Joined:
    10th Jun, 2016
    Posts:
    124
    Location:
    Melbourne
    Absolutely. Report is back and confirmed my assessment pretty much - which is reassuring. Recommended termite protection for which the indicative estimate was more than I had alloweed, but not a deal breaker.
     
  20. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    925
    Location:
    Qld
    Agree.

    Always on top of any issues with our properties.

    But obviously only those we know about.
    Marg