[VIC] Offer subject to building and pest inspection??

I am currently looking to buy an IP in Melbourne, this is my first one in melbourne, already got a few in Sydney and Brisbane. Just wondering if it is common for buyers in melbourne put offers subject to building and pest inspection clause?

Reason I ask is because one of my offer got rejected simply because I put in the B&P clause, even my offer was a few thousand dollars higher than the other buyer. The way the agent explain makes it sounds like B&P clause is not a usual thing people do in melbourne when they make offers. B&P clause seems very common in Sydney and Brisbane as far as i know.

Can any melbournian please confirm? ta

 

It weakens your offer just the same as it would in Brisbane or Sydney.

Always put yourself in the other person's shoes it will really help you with negotiating and with Melbourne being a hot market at present either conditions need to be reduce or your offer needs trump others. In a slow market you are likely able to get away with more conditions as there isn't as many offers. Remember the vendor and REA goals are get the most amount of money with the best settlement terms with the least amount of conditions.

500k unconditional offer
505k STB&P

Which one do you take?

99% of the time the vendor and rea will prefer the unconditional offer as it is done. Whereas with the STB&P and depending on your wording could cost the vendor a lot of money as you don't like it how asbestos was in the property.

If the offers were
500k unco
550k STB&P

Then 99% of the time the vendor & rea would pick the STB&P unless they know there is 50k+ worth of works.

A way around it (not advising you) is to submit an unconditional offer and organise a B&P during your 3 days cooling off or organise your B&P prior to the offer being submitted. However if you find 30k worth of work is required and your offer was 470k unco now but the other person is 500k unco which one do you think will be picked.

Even something simple as a condition to place a 'for rent' board weakens your offer but i doubt a vendor would pick a 500k unco over a 505k conditional on erected a board. However if they were both 500k and no one was budging then why would a vendor want to erect a for rent board at their house?

 

As @Big Will stated its due to a hot market where almost anything goes.

 

On negotiated purchased in Victoria you get a 3 clear business days cooling off period. If you're prepared, you can get the B&P inspections done in this time. If you're not happy with the result, exit the contract (there is a small penalty, but it's better than purchasing a dud property).

 

Interest to know how many investors here would put unconditional offer without B&P?

 

I would not buy at full market price without subject to B&P or time given to do it before signing.

I would only differ that where I am satisfied such as given access myself to do checks.

 

What if the REA and vendor (or tennant) dont co operate? I guess you have to proceed with the purchase or get finance declined if thier are serious issues.

If an REA insisted thay no B&P be included in the conditions they likley know there are serious issues.

Only if the property is getting bowled over

 

Exactly what i am thinking. If i don't put B&P clause at the beginning, contract exchange and vendor refuse to let my B&P guy access the property within the 3 days cooling off, then i can't withdraw after that and have to proceed regardless. By the way, is the 3 days cooling off in VIC extendable like NSW?

 

I have in Vic but it was an old house I was planning to knock over.

I did a subject to finance only on a place in Perth. We checked it out and it seemed ok. Likely not a long term retain so low risk. We have torn the house apart and didn't find anything major.

For a house I am not planning to knock down I would definitely get a building inspection done.

 

No, you can sign and get your cooling off, you can pull out for any reason in cool off period.

If you have your B&P guy ready to go and they know it must be done ASAP, you give them the go ahead as soon as you sign or about to sign, if you do not go through, then they will keep whatever they are entitled too IIRC VIC rules right. Talk with agent about access, if they are playing hardball with this, I would be careful.

If you specifically sign away rights, such as a waiver, then your cooked.

If you have subject to finance & the building has major construction flaws, then they will likely crash your ability to finance, but you need to know how to word the finance part correctly IMO, so you should get solicitor to look at contract first anyways.

Anything is extendable *if* both parties agree, there is no law requiring NSW sellers to extend cooling off if you have not got everything in order.

 

The fact of the matter is, you can order a B&P inspection during the cooling off period, but an agent/vendor could simply block your plan by saying that access on those days is not possible.

 

I would not go unconditional. However, I would do the B & P within the three days - and expect to not be penalised for withdrawing for a serious issue - like termites.

Having said that, I bought my IP without a B & P as it was at an unexpectedly encountered auction...saw it 30 minutes before and bought it. It was a bit risky!

But the stumps were concrete, and floor boards exposed, it had been in one family for decades and was well maintained so I took the risk. It's worked out fine. (And there were no termites!)

 

This whole thread does raise a simple question. If the agent or vendor refuse flatly refuse a B&P, ask them is there's a specific reason why they think it would fail? Perhaps you shouldn't even bother making the offer.

 

It's very common in Victoria to insist on a B&P inspection special condition with an offer - and it's best to use wording that favours you, not the vendor.

If they deny your inspector access (even prior to you making an offer) they almost certainly have something to hide. This happened to a client of mine a few weeks ago: the vendor was hiding serious water damage in the ceiling that has a $40K repair bill.

 

Our son bought at auction in Melbourne. $1m+ home.
8 people bid, but only our son and one other did B&P inspections before the auction.
The agent was a bit amused when our son did the inspection ("you only do those for really old houses") and he got the impression that it was not common in Melbourne.
Marg

 

IMO, this is a good reason to suggest that a generic B&P be available for auction purchases, because there is no cooling off. If every one of those 8 people HAD purchased a B&P, that's a bit of money p*d against the wall. Especially if it's one of many auctions one has attempted to purchase at.

(I know, caveat emptor and all that, but...!)

 

The other thing to consider is how much "damage" does exist that could be covered under insurance?

Say you get a B&P and they find water damage. This would not necessarily scare me off because it's likely my building insurance would cover it.

The reason I know this is because it happened. I purchased a 1950s home without B&P because I planned on knocking it down. In the end I didn't but turns out it had water damage in the bathroom caused by a cracked shower base and leaking pipe. Called insurance, they came out, said to get quotes, I did and said instead of them fixing it just give me the money.
Fully renovated the bathroom including totally stripping the floors and walls. Brand new bathroom with enough cash left over to pay a years rates.

The double banger would occur if you could negotiate a discount and then claim the insurance.

 

It makes some sense for bidders not doing B&P prior auction, if they do it for every auction they go, may have to spend a fortune until they buy sth. Risk takers but not for me

It is a crazy idea for some people to purchase 1m asset without doing B&P in advance. It's like gambling. Sadly these things happen often in hot market like Sydney and Melbourne atm

 

I did not have a B&P condition on the property I ended up purchasing because I had already done it twice on properties I was outbid on. Making my offer unconditional allowed me to secure the property over the other offer which was 13K more with conditions

Since then I did B&P for peace of mind and there was nothing out of the ordinary

 

this is not Brisbane, it is pretty normal - especially if in auction (if it is a hot property, you gonna have to do it prior - B&P was useful in the early 2000s and for apartments atm)