Termites, defects and flammable cladding are being overlooked by buyers rushing into the FOMO-driven property market before it gets too hot.
As house prices race ahead at a pace not seen in 17 years, intense competition has stoked a rise in the number of sales conducted without independent pest and building inspections.
Suburbanite principal Anna Porter said buyers are skipping due diligence as more homes are sold pre-auction and unconditional contracts become the norm.
“When markets run hot, not only are good properties sold for a premium, but properties that are impaired or have issues around them also attract that pricing,” Ms Porter told The New Daily.
“But buyers need to consider whether the home can be fixed with a little bit of TLC, or whether there are more inherent issues, like whether [the home’s located] across from a major highway, if it has termites, or if it’s near a train line, flight path or high-tension power lines.”
As record-low rates fuel yet another housing boom, here’s how to avoid a serious case of buyer’s remorse.
What to look for if you inspect the property alone
Despite strong calls for buyers to engage the services of a professional, some may continue to proceed without a proper inspection.
In these circumstances, Chris Wright, CEO of Melbourne-based property inspection firm Safe and Sound, told The New Daily that buyers need to maximise the five- to 10-minute window they have during an open for inspection or auction day.
“Obviously look for anything major, so cracked brickwork is a start. But the No.1 thing I look for in any property is drainage and moisture, because if it has ever been wet, it’ll last forever,” Mr Wright said.
“Also, look for gaps in all the doors and windows, that there’s enough drainage to ensure water dissipates from the property, and pay close attention to any new renovations as people often get caught out by roofs being joined together the wrong way and things like that.”
The benefits of booking an inspector
Miriam Sandkuhler, CEO of vendor advocacy firm Property Mavens, said buyers should enlist an inspector at least once before purchasing (even after several walkthroughs) as they have permission to access a roof and look under the property, and can see things the average person would miss.
These include water leakages, asbestos, dropped floors, and bathrooms that are not waterproofed.
“[Buyers] think they are saving money by not doing due diligence,” she told The New Daily.
“But if you wouldn’t go into a casino to make a $600,000 bet, why would you do so on a property?”
Suburbanite’s Ms Porter said building inspectors could help apartment buyers assess strata reports to see whether they would be liable for costs to replace flammable cladding, or whether that cost would be borne by the developer.
Additionally, she said, conveyancers can work with inspectors to run a finger over a vendor’s statement – known as a Section 32 – to uncover any undisclosed issues or incorrect information about the home.
“A seller may not know if a property has termites, or if there are issues that pertain to environmental hazards or the value of a property, so the onus is on the buyer to do their research,” she said.
The importance of a conditional offer
Ann-Maree Dunn of The Home Inspection Hub told The New Daily that while buyers may err towards unconditional offers to ward off the competition, making an offer subject to a building inspection provides the certainty of having “all the facts”, which can put buyers in a good bargaining position.
“The disappointment of missing out is still better than ‘buyer’s remorse’ and the heartache of having your dream home become a potential nightmare because you bought in haste,” Ms Dunn said.
Ms Porter said if buyers are worried about putting in an unconditional offer that they may later regret, another option is to sit out until the market cools down.
“It might be a good option for some buyers to wait until we find a balance where more listings are coming through, so they may want to consider renting for six to 12 months and look at their options,” she said.