Buying A New Home – Do I Need a Building Inspection?

You have found the home of your dreams, Launch Finance has advised that your finance is all but assured and the next question comes – do you need a pre purchase building inspection?

The reality is many property buyers have a purchase offer accepted on a new home after only one or two brief visits to the property, where a detailed inspection is rarely encouraged by the listing agent. Try crawling into the roof or under the house during the next home open!

Building inspections are becoming the norm in Australia and in at least one State they are now mandatory for all property purchases. As West Australians have accepted pre purchase pest inspections as a natural part of buying a home, pre purchase building inspections are also becoming the norm.

Quality building inspection reports are prepared in accordance with Australian Standards (AS: 4349). These standards define the approach to be taken and how building and construction defects are defined. In essence, a pre purchase building inspection should provide you with significantly greater understanding of the condition of the property so that you can plan for the initial period of ownership and any maintenance work that you may need to attend. In some instances, the inspection will identify significant structural defects, which depending on your purchase contract, may fall back onto the seller to resolve prior to settlement.

The majority of purchase contracts prepared by Real Estate Institute of WA (“REIWA”) member agents in WA contains a building inspection clause based on the REIWA standard. This very detailed clause only deals with structural defects and provides a range of remedies should a structural defect be identified during a pre purchase building inspection. Structural defects are quite common (at Houspect we find almost 10 per week) and will usually be able to be resolved for well under $5,000. It is exceptionally rare for a Structural Defect to be unable to be resolved for under $25,000.

While remedial action on significant structural defects is important, buyers also need to be aware of significant non-structural defects, abnormal maintenance items and safety omissions all of which the buyer will by default accept responsibility for. The responsibility of all of these non-structural items will not be captured by the REIWA clause and hence will need to be addressed by the property buyer, not the seller. Notwithstanding that the buyer will need to cover the cost of these items it is still important that the buyer is at least aware of them as they take ownership of the property. It can be a challenge when the buyer utilises the last of their available funds to purchase a new sofa for their new home unaware that a significant property expenditure is just around the corner.

In the event that a structural defect is identified during your building inspection and the REIWA clause has been utilised, it is important that the buyer act quickly and decisively on how they respond as the REIWA clause has some very specific requirements and time frames. Your building inspector and conveyancer will be able to provide you guidance through these steps.

Where a property has obvious defects or significant maintenance issues, it is often more appropriate to have the building inspection undertaken prior to negotiating the sale contract, as having a full understating of the condition of the property can significantly impact negotiations.

While Houspect has been operating for circa 30 years and have conducted in excess of 50,000 building inspections, the building inspection industry in WA is still in its infancy and is unregulated. There are no formal educational or licencing requirements for building inspectors. At the very minimum buyers and sellers should ensure that the building inspector is a WA Registered Builder with at least 10- 20 years direct construction experience. The building inspection firm should have the depth of resources to support you and needs to have appropriate Professional Indemnity and Public Liability Insurances. There are a broad range of building inspections beyond pre purchase building inspections. These range from construction inspections, dilapidation inspections maintenance inspections and dispute and litigation inspections.

For most people, buying a house will be one of the largest financial transactions that they will enter into during their life. It is unreasonable that a buyers purchase due diligence should be based on a limited review of the property during a small number of home open visits. Vendors expect building inspectors will look into every room, every cupboard, in the roof, on the roof and where possible under the floor, it’s what we do. Building inspections enable you to buy, build and invest with confidence.

Launch clients are Preferred Clients of Houspect WA. For more information about pre purchase or construction inspections call Dave Clark at Houspect on 9240 8855.

Written by David Clark, Director of Houspect WA