Your home loan is secured, you’ve researched the market and you’ve been checking out homes. Then, you’ve finally found your dream home and are ready to purchase.
But there is one remaining item: the pre-purchase inspection reports. Do you really need it, or is it an added cost that you can do without to help you stay within your budget?
Pre-Purchase Inspection Report Explained
There are many types of reports that can be done on a property before it is purchased.
- Building inspection. Involves checking the state of the home, including looking for damage on the roof, floors and walls, deterioration, cracks or growing moisture. Some may also include the plumbing and the electrical wiring but check with your inspector first.
- Pest inspection. Entails finding signs of any infestation, mostly termites or termite damage.
- Strata inspection. Checks the finances and the minutes of the Owners Corporation operating the apartment or strata townhouse, to notify the buyer of any issues in the building, or the possibility of problems in the future.
Other inspections may be required, depending on the age, or type, of the home, including an asbestos inspection or pool inspection.
Reasons to Get a Pre-Purchase Inspection Report
Knowledge is power.
If you decide to forego inspections when you buy a house, you could end up with hundreds or even thousands of dollars of unforeseen expenses. You might think you got lucky with a bargain, but you find out you’re facing $300,000 to $400,000 in repairs, and suddenly it comes to you that you purchased a lemon.
If you believe you bought well the first time, you got a good property and you’re more likely to enjoy a thriving financial life. But if you purchased something with significant problems, recouping your losses could take a long time.
It’s important to stand firm against a dodgy real estate agent who might be pressuring you to decide quickly, who might promise you that there is no need for reports and who helps you get swept up into a rush of emotions and urgency – about purchasing.
After you have purchased the home and moved in and then you see problems, it’s too late. It’s always a case of buyer beware.
Things to Look for in a Pre-Purchase Inspection Report
A good quality report should itemise any defects clearly and evaluate the possible cost of repairs. It should be detailed and examine every feature of the house you’re considering purchasing.
It can be difficult for a prospective buyer to grasp the extent of issues so it’s crucial for the report to provide a strong indication.
Most properties will have some issues, even brand new homes, and those issues can be big or small. The big problems like rising damp or termites can be expensive to fix so you really need to know what you’re getting before your purchase.
Strata Report Explained
For strata, expect another layer of complexity. In addition to having to know whether your individual apartment or townhouse has no defect, you have to find out whether the building it’s a part of has any significant issues.
Along with the unit, a building inspection should check the building’s façade, foundations, roof and other common areas that, as a strata owner, you’ll have to share in the maintenance costs. These can be separate buildings within the complex or village. Plus, a strata inspection has to check the owner corporation records to look at all previous documents and minutes to make sure the building isn’t under-insured or there are no claims being made by, or against, the property, as well as possible issues or disagreements.
However, having a strata inspection doesn’t mean you can’t have a building inspection done anymore. When I bought my strata property I had both strata and building reports completed.
If there is an issue, like concrete cancer, the owners might not include it in their documents so as not to threaten the value of their units.
The Cost of Pre-Purchase Inspections
Costs differ, but when evaluating which inspector you’ll hire, you have to understand that you get what you pay for. A report that you got for a bargain might turn out to be not worth the paper it’s written on – and cost you hundreds, or even thousands of dollars, in the end.
Some property sellers have reports conducted in advance to provide at no cost to prospective buyers however, I would always recommend getting your own report.
Alternatively, many inspectors feature the properties on their website that they had written reports on, so you can purchase them at lower cost than if you commission your own. You could also talk to your real estate agent if they know any inspector that had previously written a report.
Bottom line, make sure there is a pest and building report before you buy the home and that you actually talk to the inspector about any concerns you may have. The best question I would ask is: Would you allow your mum to buy this house based on the findings in your report?