- There are many inspections and reports you can make use of; perhaps the most important is the building & pest inspection.
- Other circumstance-specific ones are also essential, such as a body corporate & strata report.
- If you have enlisted a conveyancer, they should be able to point you in the right direction and help you make sense of what reports to get, and the details held in the reports once they are delivered.
You’ve done the hard yards - you’ve figured out if you’re ready to buy a home, gone through the rigours of research and open homes, used InfoChoice’s free property report, and gotten pre-approved for a home loan - now it’s time to put your money where your mouth is, or is it?
If you’ve negotiated with your target property’s vendor or agent, there’s a few reports to consider before putting pen to paper. If you establish a conditional sales contract (note: auction sales are unconditional) you can put ‘subject to…’ and insert basically whatever you want.
A vendor and selling agent will likely want a frictionless transaction and in a hot market they might baulk at a contract with lots of conditions. Nevertheless, stick to your guns; your conveyancer will help you through the contracts process.
While many vendors and estate agents are fundamentally honest about the places they sell, there may be defects and problems that they simply aren't aware of. It might look great on the outside, but how is the wiring? Are there termites or other boring insects hiding in the walls and woodwork, silently eating your home?
This is where the different types of property reports come in. They're conducted by independent inspectors and offer buyers and sellers an in-depth, realistic appraisal of the house or flat you're about to buy.
1. Building and pest inspection
- Cost: $400 to $500 for an average-sized house.
This is the most comprehensive inspection and report you can have, and arguably the most essential. It'll look at the structural integrity of the property, as well as any defects and maintenance issues.
You'll also find out about moisture penetration into the foundations and walls, the condition of the ceilings and roof, the electrics, the waterproofing in the bathrooms and so much more. The building inspector will examine doors and windows, look out for any cosmetic repairs that are covering up bigger problems and also make sure that all of the structure is compliant with the area's building code.
It's not just about the building, either, as the inspector will look at patios, free-standing structures, drainage, boundary walls and fencing.
There's much more to it than is listed here, and so you'll have a detailed account of everything that's wrong - and right - with the property. You'll find out how much longer the roof will be intact for, for example, as well as whether you need to reseal your shower cubicle after moving in.
Many building reports come with a pest inspection as well. These are particularly important on timber framed homes. Many inspection companies use thermal imaging to detect insect nests and activity, as well as any other unwelcome guests that may be lurking in your walls, under your floors or in the ceilings.
If your property is clear, you'll be advised about keeping it that way and if there is evidence of a pest problem, you'll get recommendations for pest control experts - or you might want to re-consider the property.
Be wary of properties that already come with building and pest reports done. If in doubt, do your own research into a reliable building and pest inspector and go your own way.
While a building and pest inspection is fairly thorough in its own right, if you’re wanting to do a deep dive into the property, it could be worth hiring different specialists for different aspects of the property.
Drainage and plumbing report
A qualified plumber will take a look at the plumbed fixtures and fittings and ensure they are up to standard. That same person might also have expertise in gutters and drainage. If you receive a lot of rain, you want to make sure your home can handle it, and that it disperses from the property quickly.
Electricity report
An electrician will look at the wiring and electrical situation to ensure it’s up to standard. Older houses in particular can be a nightmare with what lurks beneath the walls, and fixing faults later could be a huge effort at your expense.
Pool report
If the property has a pool, it could be worthwhile getting a separate pool expert in to assess if it’s in good working order and that it’s safe to use. This includes the shell itself, ensuring that it’s not cracked and is water tight, as well as the pumps, filters, lighting, and any additional features.
2. Valuation report
- Cost: Around $300, driven by the bank; some lenders may waive this fee.
Buying a property is one of the biggest, if not the biggest, investment most people make and so it makes sense to be sure that the place and the land it's on is in good condition and actually worth the asking price.
A valuation report is important for the seller as well as the buyer as if the inspector comes back with a huge to-do list of essential repairs, it's best to get these out of the way before going to market. Either that or reflect the condition in the asking price.
As the bank’s money is also on the line, this might be required to be taken out as part of the home loan application process. Valuations from the bank vary both in scope and in cost, and will be taken out on behalf of the bank.
Be aware that in a hot market, a bank’s valuation may seem conservative. If there’s a huge discrepancy between the valuation and the asking cost, ask the bank why - the solution might be to negotiate with the vendor a more reasonable price, continue shopping for a home, or if you are able, extend your loan-to-value ratio.
3. Survey report
- Cost: Around $500, more for larger properties.
While this might be provided along with the sales contract, a survey report is conducted by a registered surveyor for a ‘lay of the land’. This includes identifying existing buildings, land boundaries, fences, easements (a right to use another person’s part of a property for certain purposes, such as a shared driveway), and covenants or restrictions.
If you want to avoid a potential spat with neighbours over fence boundaries, encroachments, or shared property such as driveway use, this one is essential.
4. Body corporate and strata reports
- Cost: Depends on jurisdiction but $30-$40. One might be provided to you. An inspection certificate costs extra.
Also known as ‘section 37 notices’ this one is essential if you’re going to be buying in a strata-titled property, such as a villa, townhouse or unit. These should be provided to you or purchased as part of the inspection and buying process. A brief checklist to look for includes:
-
Body corporate fees: They are often split quarterly and split into admin costs and the sinking fund. A complex with lots of features such as pools, lifts, movie cinemas, gyms will likely attract much higher fees due to the higher ongoing maintenance and insurance costs.
-
Sinking fund: Is for infrequent larger expenses. A healthy sinking fund indicates an ability to cover these costs, such as replacing air conditioning or re-paving driveways.
-
Insurance: You’ll want to make sure the complex is adequately insured in case of emergencies such as natural disasters. Public liability is also included in this, such as if an injury is sustained in the common areas due to building negligence.
-
Administration: Administration covers ongoing regular maintenance of the common areas such as hedge trimming, pool maintenance, and so on.
-
Meetings and records: You’ll want to see a record of at least annual meetings and minutes, and a breakdown of what was agreed at the meeting - for example, if a big maintenance or insurance item is coming up.
You might also like to make use of an inspection certificate, which tells you exactly how much you need to pay on your lot in the current financial year.
Remember, as a unit owner, you are automatically part of the body corporate where you can vote and have your say at regular meetings. If a strata report looks confusing or something doesn’t add up, a conveyancer should be able to digest it for you.
Photo by Towfiqu Barbhuiya on Unsplash
Need help with a home loan?