The Pre-purchase Building Inspection Timeline
Think of buying a property as a bit like swinging from a trapeze: Timing is everything. You shouldn’t make your move without knowing fully what you’re getting yourself into and timing it perfectly. When you’re reaching into unknown territory, you want to be sure that there’ll be a strong pair of hands to catch you. That’s exactly what a pre-purchase building inspection is – a safety net for investors who are taking a risk on a property purchase.
Without an inspection, you risk being stuck with a building that’s a crumbling money pit or a pest-infested lemon. Choosing to get a pre-purchase building inspection done and timing it right is crucial. It’s the difference between falling disastrously…or flying spectacularly. So, why should you get a pre-purchase building inspection in the first place? And how do you fit it into tight timelines associated with buying a property?
Pre-purchase building inspections
A pre-purchase building inspection is a comprehensive visual inspection carried out by a suitably-qualified professional. It includes an expert assessment of the property’s interior, exterior, sub-floor area, roof space, roof and immediate surrounds.
It’s usually done at the request of a party considering buying a particular property. If you’re looking to buy a property in Brisbane, you’d obtain a pre-purchase building inspection as a way of identifying defects so that you can make an informed decision as to whether to proceed with the purchase.
In some cases, a similar inspection can be organised by you if you’re the vendor prior to putting the property on the market. That way you can utilise the report to rectify any defects so as to prevent them putting a purchaser off the sale.
Why you should never put a pre-purchase building inspection in the ‘too hard basket’
A professional pre-purchase building inspection can perform a number of functions:
- It will detect any latent (hidden) structural defects that might otherwise escape your attention.
- It will assist you to avoid being deceived as to the true state of the property by any cosmetic works that have been undertaken prior to a property being put on the market.
- A pre-purchase building inspection will alert you to issues such as the existence of any leaks or drainage problems that can cause mould, rising damp, subsidence or other serious issues over time.
- It includes an expert appraisal as to the severity of the defects.
- A comprehensive pre-purchase building inspection will also give you a qualified assessment as to what needs to be done and the likely cost of rectifying those defects.
- It will also give you an indication of the sort of problems that you will encounter with the property in the future.
A pre-purchase building inspection won’t just arm you against the possibility of buying a property that is structurally unsound. It can serve an even greater purpose: You can use it as a bargaining chip in your negotiations as to purchase price for the property.
When you think about it, it’s a savvy investment: Your initial outlay for the cost of the pre-purchase inspection may well translate into a saving of thousands, potentially even tens of thousands, of dollars off the listed price.
Working out when to get your pre-purchase building inspection done
Working out when to schedule your pre-purchase building inspection depends on how the property is being sold. The two most common ways in which residential properties change hands in Queensland are:
- via auction, and
- sales via private treaty.
Less common are property sales that take place via a tendering process. You can also buy ‘off the plan’. That’s a way of describing when you buy a house, unit or apartment that’s not actually built yet. Here we’ll focus on auctions and sales via private treaty.
Auctions
An auction involves competing parties bidding publically on a property on a set date and at a set time. The successful bidder enters into a contract of sale then and there. The upshot is that they’re legally obliged to complete the contract. For that reason, if you’re bidding on a property at auction, you must obtain a pre-purchase property inspection report before the auction date.
If it’s an unfavourable report, there’s nothing stopping you from simply walking away. Your small investment will have saved you potentially tens of thousands of dollars and a whole world of heartache.
Alternatively, you can bid cautiously on the property, keeping in mind the defects and other problems uncovered in the pre-purchase building inspection and how they should be properly factored in to drive its value down. Keep in mind that other bidders might not be aware of the defects and may bid enthusiastically and without the same restraint as you.
If the property is passed in at auction you’re armed with sufficient information about the state of the property so as to enter into meaningful negotiations with the vendor’s representative. It’s the sort of bargaining chip that can translate into a lower purchase price.
It’s really important to keep in mind that, if you buy at auction or you’re a registered bidder and you then go on to buy the property via private treaty on the same day as the auction, there’s no cooling-off period. This is also true if you buy the following day when the property is passed in at auction. This is particularly important if you haven’t yet obtained a building inspection. You’re stuck with it.
When you bid on a property at auction, you can’t make your bid conditional on getting a satisfactory pre-purchase inspection. Your bid is unconditional. Your only protection is to obtain a pre-purchase inspection report before the auction so that you’re fully informed about the state of the property before you commit to going ahead with the purchase.
Properties for private sale (via ‘private treaty’)
Properties not sold at auction may be sold via a treaty or private sale. Usually, the property is listed on the market, inspections are scheduled and interested parties make offers which are then submitted to the vendor for consideration.
If you’re looking to buy a property this way, ideally, a pre-purchase building inspection should occur prior to making an offer or entering into any agreement or contract.
If for some reason that is not possible, your fall-back position is to make an offer that’s worded in such a way as to be conditional on receipt of a satisfactory pre-purchase building inspection report.
The devil is in the detail though. You have to get the wording of your offer right. Get it wrong and it might not afford you any protection. A report that’s satisfactory to whom? And would the vendor providing their own report mean you can’t then rely on your report to get out of the purchase? If you’re proceeding down this path, you should obtain legal advice about how to frame your offer.
One of the key points of difference between a residential property bought at auction and a property the subject of a sale via treaty is that the latter attracts a 5 business day statutory cooling off-period. In certain circumstances, you may be able to step away from the purchase, but it might not be an easy process. You might also have to pay a penalty if you do decide to back out of the sale during the cooling-off period. That penalty (up to 0.25%) is taken out of your deposit. That’s a substantial amount of money to lose for changing your mind.
In short, don’t just assume that you can wait and get your pre-purchase building inspection done after making an offer and then back out if you’re unhappy with the true state of the property. Your best bet is always to organise a professional pre-purchase building inspection as early as possible.
Organising your pre-purchase building inspection
So, you’ve found the perfect property. You’re keen to organise a pre-purchase building inspection. What next? Your next move is to find a pre-purchase building inspector.
Finding a pre-purchase building inspector
In Queensland, only a Completed Pre-Purchase Building Inspector or a registered architect can undertake a pre-purchase building inspection. This means that your building inspector must have obtained the appropriate licence from the Queensland Building and Construction Commission (QBCC).
Your pre-purchase building inspection report must also comply with the stringent requirements set out under Australian Standards, in particular, AS4349.1.
Your pre-purchase building inspector is also required to carry professional indemnity insurance and is subject to the QBCC’s complaint-handling framework.
What you should look for in a pre-purchase building inspector
It’s not enough for your pre-purchase building inspector to be qualified, licensed and insured. You should look for someone who’s experienced, professional and has great verbal and written communication skills. They need to be able to break down complex problems into plain English.
Perhaps most importantly, they should have a well-developed sense of urgency. You want someone who can:
- complete a comprehensive inspection of your property as soon as possible;
- provide you with a prompt verbal report; and
- follow up with an in-depth written report that meets the stringent Australian standards.
Crucially, they need to be able to do this within a very tight timeframe; often a matter of days. This means that you can comfortably obtain your report, evaluate its contents and weigh up your options before having to put pen to paper and commit yourself to what could be the single biggest financial decision, or mistake, of your life.
Making sure you’ve got a safety net there to catch you is the key to confidently soaring to new and exhilarating heights of property ownership with the greatest of ease. A pre-purchase building inspection is that safety net.