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selling with building and pest inspection, bad idea?

Discussion in 'The Buying & Selling Process' started by Barny, 12th Nov, 2015.

  1. Barny

    Barny Well-Known Member

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    hey peeps, what are your thoughts if you were looking to purchase a home, and the seller had a building and pest inspection already done. Would you see this as someone trying to hide something, or speed the process along?
    As I'm selling soon I have a building report from when I purchased it 3 years ago, and last month performed a routine termite inspection. My agent adviced he doesn't want to advertise the reports because buyers will think we are hiding something. I will do what he recommends but I'm not sure I agree. I'll let you decide.
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    In Canberra, that method is compulsory.

    In every other state, I wouldn't like it. I'd prefer to get my own then I know its legitimate. If the vendor had one, how do I know whether his mate had done it for him.
     
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  3. larrylarry

    larrylarry Well-Known Member

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    Agreed. I recently came across one which is a bad report and if I was serious about it I will still get my own.
     
  4. wylie

    wylie Moderator Staff Member

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    This is not "normal" in Brisbane. However, last time we sold we were advised by the agent to pay for a building and pest report and allow potential bidders to see it. Upside was that we saw what needed doing (or not bothering to do). Downside was we had no idea who really was interested enough to get one done themselves.

    D.T.'s comment baffles me whenever it is raised on this forum. We are talking a legitimate building inspection company here, with insurance in place and the company's credibility on the line. A "mate" is not going to writ up a building report that is dodgy. The ramifications if that happens could mean he loses his job, and the reputation of his company (or his boss's company).

    As a buyer I would trust a building inspection report, arms length, but not a report on a plain piece of paper saying the house checked out not on a letterhead and clearly a professional report. That would be easy to see as a smoke screen.

    Another interesting thing brought out by the building inspection was that he noticed a certain flashing or sealer had not been installed when the new roof went on. (Roof was replaced under insurance just prior to selling). I called the roofing company who sent out a person to check the job (a second time) and wrote me a letter confirming the flashing/sealing was done, was done neatly with no "usual" blobs showing, hence our building inspector thinking it was missing.

    We attached that to the inspection report. Without it, the buyer may have had a building inspection service also think something was missing, and we would very likely have had them try to negotiate us down for something they thought was missing, that was there all along.
     
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  5. chylld

    chylld Well-Known Member

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    Happy to buy a property with the B&P already done. Of course I'll check that it's a legitimate company, but it's something that I'd have to have completed either way.

    If anything I'd prefer it to be done by the vendor as they often have caveats included e.g. couldn't access sub-floor space etc. So if I felt like it, I could spend my money on a more detailed inspection targeting the areas that the general B&P missed.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    A double edged sword - highly unusual in states where it's not compulsory and is useful as a vendor to pinpoint the issues you may not be aware of and can be addressed presale.

    The downside is that you don't know if anyone has commissioned a p&b and is flagging their intetest by relying on the p&b provided.
     
  7. Simon Hampel

    Simon Hampel Founder Staff Member

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    That's all well and good - but I don't use just any mortgage broker, nor do I use just any conveyancer, or insurance broker, or accountant, or property manager, or buyers agent, etc.

    I choose my advisors carefully and I consider the "advice" I get from a building and pest inspection to be just as important as any other advice I get when buying a property.

    I'd rather know I was getting a good and thorough report from someone I trust than rely on insurance and the threat of loss of credibility from someone I have no idea about. I certainly don't assume that all building and pest inspectors are made equally or take as much pride in their work.
     
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  8. Barny

    Barny Well-Known Member

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    I would also pay for my own if it was presented even if it's from a reputable business that is well known.
    But if a seller presented one already would people view this to be a positive or negative towards the sale?
     
  9. melbournian

    melbournian Well-Known Member

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    @Barny if you ask me i wouldn't been putting it out there. it only gives the buyers additional leverage to have the ability to say there's something wrong price should be reduced by x, amount. i had a place that a deck was build that was structurally sound etc but didn't have a building permit as it slightly was over the 1 meter mark in terms of height which required one, and this was used as a negotiation tactic by the buyer to push down the price.
     
  10. Big Will

    Big Will Well-Known Member

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    When you buy a second hand car it comes with a RWC however I still get the car tested by RACV or someone else. This is my own DD that I pay for.

    Same thing with a house that had a B&P, I would read it and if I was still interested I would get my own person to do a report. Like @wylie said these guys are not going to risk their business for a mate, unless it was their last job they were ever going to do.

    My dad had a scenario where the neighbor was disagreeing with the surveryors who used GPS technology to mark the fence line and who were the tree keepers were. The neighbor thought that dad hired a mate to do it and he was going to get his own mate to do it (he never did) but the guy dad hired said you couldn't pay me enough to do a dodgy on the report or if you did it would need to be worth it as he wouldn't be licensed so he wouldn't work again. This would be the same as a building inspector unless the mate has paid them $x00,000+ for the report he wouldn't be dodging it and you still have the right to do your own report.

    Regarding buyers knocking price further down if the issue was presented at the first with the B&P I would decline as they had full knowledge of the issues before they submitted their offer. If you felt they were trying to screw down price because you let them know of an issue well if they did their own B&P they would also be doing the same.
     
  11. citystar

    citystar Well-Known Member

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    I've had to deal with this before in QLD and I always advise the Sales Consultant I will be organising my own independent B&P at my own expense. I also ask if anyone has put offers forward and if so, if B&P was the reason they were cancelled.

    Sometimes I focus on places that have known issues, just not structural. I don't mind purchasing a place at a discount because your regular Mum & Dad investors looking for a PPOR walk away from the deal because it involves cosmetic renovations or minor termite treatment/repairs.
     
  12. wylie

    wylie Moderator Staff Member

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    I think the difference is that "most" people, unless they are buying regularly, will pick a building and pest inspector from a referral of the agent, or from google. I would highly doubt any reputable building inspection company would be swayed by a vendor asking them to do anything remotely dodgy. They risk their reputation, livelihood and I just cannot see it happening.

    I see it as very different to using a broker, accountant, property manager where you have an ongoing relationship with them, even after buying one IP. Your loan broker (for example) knows your position, your risk profile, everything about you. A building inspector is not looking for anything other than if the building is sound. It either is sound, or not.

    If not, he details the problems. If he overlooks a problem deliberately, he risks his livelihood. If he simply misses a problem, he has professional insurance.

    I simply find it curious that people think a professional company that does this would remotely consider doing a dodgy report for a vendor. Perhaps I'm naive?

    I would not trust a bit of paper signed by "Joe the builder" that isn't from a reputable company, and who could very easily be an attempt at fudging the true situation of a house, but a report from a professional should be the same regardless of who pays for it.
     
  13. Simon Hampel

    Simon Hampel Founder Staff Member

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    I don't think it's so much about "dodgy" as it is about how well they do their job.

    As you said - there is always professional insurance, but as I said, I would rather get someone I know will do a good job than rely on insurance to help.

    Actually, the building reports I get are far more detailed than just a "sound vs not sound" tick. They list (in great detail) information about the structure and likely history of building works on the property, identifying items which are problematic now, as well as documenting likely costs involved in repairing or replacing other aspects of the property which are going to require work in the near future.

    The purpose is to give you an indication of how much you are most likely going to need to spend over the next year or two (or even ongoing in some cases) on important maintenance issues - to help you judge whether the numbers still stack up.

    My last building inspection produced a 9 page written report detailing the condition of all aspects of the property both inside and out - including internal fixtures.

    I absolutely disagree that a building report is likely to be the same no matter who does the work or who pays for it.
     
  14. MattA

    MattA Well-Known Member

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    I forget the name, but at one stage there was a company here on the Coast that did a P&B and then sold the report multiple times...

    Any potential buyers could buy the report at 50% of the full value. If they walked away they didn't pay anything more, but if they proceeded with the sale they then paid the remaining 50%.
     
  15. wylie

    wylie Moderator Staff Member

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    I agree with all you've said really. I didn't mean to say any building report would simply say "sound vs not sound". In fact, I've never seen a good report. I've read two such reports for friends buying this past month. They go into great detail (as did the one we had done when we were going to sell).

    I guess what I'm trying to say is I think those who believe any competent building inspector is going to listen to a vendor who tries to influence them is naive. They just will not write a report which puts their reputation at risk. If they are incompetent that is entirely different.

    I do understand though that as a vendor, if I searched for an incompetent inspector, I could present that report and then it would be up to the purchaser to get one of their own. We once sold and were forced to pay for a pest report (very unusual but we were in a bit of a corner). The pest report sounded bad. We had no termites, but it was written in such a way to suggest it was only a matter of time. It read badly. It scared me, and I knew we had no termites.

    Our solicitor suggested we pay for another report. This one was also factual but didn't sound so scary. As a purchaser, though both reports said the same thing "no termites present" the way each was written made a world of difference to someone reading them.
     
  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The contract between a building report person is with the person that ordered it. So if a third party comes along and relies on that report they will have a difficult time suing the person that wrote the report.

    Also what is to stop the seller instructing the builder to not consider that termite infested deck, for example.
     
  17. Bargain Hunter

    Bargain Hunter Well-Known Member

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    There has been some discussion in NSW to make a building report compulsory for auctions however this has not gone ahead.

    I think most inspectors would do the right thing but some may be influenced by who's paying or some additional incentive.

    Personally I find most B&P fairly generic with more pages dedicated to disclaimers than substance.

    Regards

    Andrew
     
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  18. Nick Valsamis

    Nick Valsamis Well-Known Member

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    It's also 3 years old now so either way people would generally want to do another one if in case something has changed in that period of time.
     
  19. wylie

    wylie Moderator Staff Member

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    I'm not sure about the first point you make. What about the states where getting such a report is compulsory (I think it is compulsory in some states?). That must give the purchaser some protection, surely? Perhaps it is worded such that it protects the purchaser. I have no idea?

    What building inspector would agree to not consider that termite infested deck? Really? Why would he take that risk?
     
    Last edited: 16th Nov, 2015
  20. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You cannot sue for breach of contract unless you are a party to the contract.

    There would be no risk if a certain structure was excluded.