How unusual is it for a house buyer to request a building inspection before a contract has been signed?
Edit: Also what about before a contract has been drafted?
Is It Unusual for Buyer to Request Building Inspection before Signing Contract?
bargain huntress on 23/12/2020 - 14:59
Last edited 23/12/2020 - 17:48 by 1 other user
Last edited 23/12/2020 - 17:48 by 1 other user
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Actually not, if you don't sign a contract then the seller can sell to someone else. Usually you sign a contract with a clause that if anything is found in the building inspection you can walk away.
This. If you're going to the trouble of doing a building inspection, you want to be sure it doesn't get sold to someone else in the meantime. Sign a contract with conditions such as "subject to satisfactory building inspection". The seller then might negotiate a reword of that to stipulate building inspection doesn't identify significant faults requiring $x to remediate.
I’ve never risked going to contract before P&B. That’s just me. Apparently 70% of people don’t ever bother.
Doesn't happen in Sydney.
You can request whatever you want, but if the place has any decent demand, the agent would politely decline.Sign it unconditional (with usual 7 day cooling off) or leave it, period.
Everywhere else in Australia, subject to building report is not uncommon.
Sydney is stupid.
Quantumcat is correct. It is actually very unusual. No point getting a building inspection and the agent decides to just sell to someone else anyway. Waste of money.
Not really. I have just done that as the property is going to auction and the vendor didnt care about the B&P report. Therefore, I have to do my own before heading into the auction.
Auction is different, I assume this entire thread is about a regular private sale and not auction.
“Waste of money”
I’d rather waste $500 than be stuck with something infested with termites and/or needing tens or hundreds of thousands in repairs. If i miss out on the place, so be it.
Depends who does the inspection. The guy i had was useless. 3 of my 4 bathrooms flooded despite him saying he runs each shower for 10 mins in every new house. If he had even run one for 2 minutes it would have flooded. That was just the tip of the iceberg.
@bargain huntress: Ask around for other people you know that have used them for recommendations. Better to talk with someone in the industry or similar. Also attend the inspection with them to make sure they actually check things.
Yeah nah. Not a waste of time. Building inspection saved my folks almost 30 thousand in repairs. Lost their initial deposit but was not worth the hassle.
I thought this was common practice? I wouldn't want to find a dump in the toilet of a house I've just bought upon moving in..
You do realise there is a month or more between the pre purchase inspection and moving in? No one can hang on that long.
LOL!
I got my first rental because someone took a dump in the toilet and didn't flush. Many of the others inspecting were turned-off by this.
Now I'm ready to buy maybe my house-hunting strategy thus far has been all wrong. Perhaps I should attend home opens ready to "take care of business"?
What if you live at Engadine Maccas
what an odd question
0% unusual
my brain hurts … this make
Perhaps you should ask for a diagram. A drawing, of sorts.
My brain is slow to compute this
-100% unusual
Tom Jones thinks it's not unusual.
And 'He' was well built!
Same question: What about before a contract has been drafted?
Well this begs the question as to how there is a "buyer"?..
Interested house shopper? Whatever you want to call them is fine
If someone wants to potentially waste > ~300 on an inspection on a house they like without locking it down … they can .. It's a stupid move in my opinion.
Unless it's an Auction, although they sometimes already have a Building & Pest inspection you can review prior to bidding.
I don't know about before the contract is signed.
I put a condition of sale when signing the contract that the findings of the structural report were satisfactory.
If you do it before means you could have no contract in place and the seller could easily find another buyer.
Aren’t you still liable for the 1% if you withdraw?
No. Full refund if the report was not satisfactory.
Not what my conveyancer said. The 1% is a done deal regardless. I’m nsw.
Edit: 0.25%. No idea why 1% popped into mind.
Has to be deemed a major defect to forfeit the contract.
You can put whatever requirements and penalties you want in there. If the contract is subject to pest and building then usually you walk away free of charge, same as subject to finance
can go either way with your path, but getting it done before hand might be pointless as the vendor could still reject the offer.
I never did one, but i knew i was buying a 1960's house anyway. Expected cracking and the works.
Same. Just bought a 1950's house on 1/4 acre. I could see some of the stumps had sunken so I had a good look and poke at those and the others to make sure (as best I could) that it wasn't termites or dampness. For this type of property/house all the value is in the land.
So you are competing against other buyers who will just be knocking it down. So to remain competitive you need to follow suit. If a a vendor sees "subject to x" vs unconditional they are more likely to take the unconditional. Also the house is tenanted so that makes it more of a hassle for the vendor to facilitate inspections.
Try to take someone who knows what to look for to the scheduled inspections. 80% of the properties around here are going to auction anyway, so you can't be wasting $300 a pop on the off chance that you won't be way outbid.
We did for a ‘diamond in the rough’ 1800s cottage a few years ago. Surprise Surprise the Building report said lots of problems. We bought it anyway and found a lot wasn’t that bad and the inspector was just covering @ss.
Few years later we found another place of similar age and just bought it.
Old houses have problems. You have to accept and deal with it. If the location is right and you do the work properly you won’t lose out.
I would only use a Building Inspection to scope works, and maybe bargain down for an older place.Were you not concerned about problems like bad electrical work or plumbing?
I'm close to offering on a 50s place and trying to think what problems we might have. Asbestos is another concern with a baby.
its likely that the house from the 50s needs a reno anyway. all its electrical will need to be ripped out and replaced significantly anyway. you just need to budget that 5-15k for it, and the same for plumbing. 20-50k of repairs for a 1mil+ investment on the balance of things shouldnt be something to put you off purchasing a house.
Some bad electrical work and plumbing, and asbestos is pretty well a given in a 50s house. Think about it - post WWII decade, not much money, stuff often done on the cheap.
If you want to buy and not spend anything on the place, some concern is reasonable.
I would never buy a place like that. Always look for something that is either untouched, or where I can alter what has been done to make it mine and add value.
So I save on the purchase cost, but understand that I will pay to renovate, fixing problems as part of the process.
For a 50s place I would really want to have a careful look at foundations and have some understanding of the local soils. Not difficult for you to do yourself.
In my experience of buying a house exactly once… there is a kind of catch 22 in that buyer doesn't want to pay for an inspection only to have the house sell to somebody else, likewise vendor doesn't want the hassle of facilitating an inspection that doesn't lead to a sale. Also consider if you are the buyer and you pay the inspection and you are happy with the results, you are now in a worse bargaining position because the vendor knows you are interested and you've already got a 'sunk cost'. The solution… make a written offer that says "subject to building inspection". This way the price is already decided, both parties are reasonably sure the sale will go ahead unless something major comes up in building inspection. Of course, the best person to discuss this with is a conveyancer, and since both parties will eventually need a conveyancer anyway (do not use the same conveyancer!) why not contact one and get their advice?
Yes, this is the usual way. Many people answer without reading the question carefully. Building inspection before the contract is signed is rare because there is no point in paying for the inspection only to have the seller backs down.
I'd do one, why wouldn't you. Even if you were already rich you'd still do one. If you're not rich then your money is even more important to you and you shouldn't risk going forward with an uninspected building, yeah?
Maybe they are getting a bunch of buildings inspected, not just yours. Why waste time going forward with a potentially bad building.
Why wouldn't you?
Because while you are getting an inspection done before signing a contract, the owner could sell to someone else with a contract that is "subject to satisfactory building inspection".
That is why you wouldn't.
Maybe they from China or something and they do things differently over there.
I reckon OP wants to sell a dodgy house and doesn't want the buyer to inspect before signing?
Relative is selling a house and I was worried buyer asking before contract was dodgy
Not dodgy. Dumb because seller could change their mind and not sell to them. And then the potential buyer has wasted their money. Proper order is to sign a contract with the clause that they are allowed to renegotiate price or walk away if the building inspection turns up anything unfavourable.
But if the house is a lemon and you get out of the contract later, you've wasted a lot of time and you're no sooner to owning a property. Time is money, yeah you save a few hundred on an inspection but you lose the opportunity of owning a property if the single contract you went behind falls through. If that property is to earn money asap than losing that time you own it costs you money.
Honestly I'd rather just have a due diligence clause over a building and pest as it covers a lot more and gives the buyer an out over pretty much any issue.
I think OPs question is valid, and this is a weird situation.
Buyer usually makes an offer subject to building inspection, then once the contract is signed, buyer does the inspection, and then re-negotiate the price if the inspection turned anything up.
If they haven't signed a contract, there is no offer. Weird.
Its definitely normal. In some cases they recommend drug residue testing also. Actually they say it should be done before moving into rentals also. Who knows what the previous occupants got up to.
If its drug residue or major structural issues they will both cost a fortune to fix.
It's very normal to have build and pest inspection - personal experience and coming from my partner who is a real estate agent.
Thats not what OP is asking…
We did a building and pest inspection before signing our contract, if there was any structural damage we would be able to back out of the purchase, therefor only losing what we paid for the inspection and not our deposit.
You wouldn't have handed over a deposit yet if you hadn't signed contracts
You typically would still pay a holding deposit even before a contract is signed if the offer is accepted.
My concern is what subject to satisfactory building and pest inspection clause would provide, if someone can clarify. What is considered satisfactory and what's the threshold to back out.
Edit: Can someone please clarify how that would work for an auction? Do you have to have the building inspection done (I'm in NSW) before the auction. Isn't it the same issue that you would have wasted the cost to have the inspection performed if you've been outbid?
There is no cooling off period if you won in the auction. Therefore if the agent did not provide a B&P report, it is better to do it yourself before going into the auction. This can be arranged with the agent.
From the report, you can then decide what could be your limit and whether you want to get into the auction or not.
But of course, if the vendor is taking offer prior to the auction, it could be a different story like what OP mention here.
We handed over the deposit to the real estate agents the day our offer was accepted, it's what the real estate requested, as stated in other comments I think it was a holding deposit, I'm not too sure as it was our first house, we thought it was normal. Probably didn't help our offer was accepted late on a Sunday.
Did you mean AFTER signing the contract? Or signed with clause as mentioned by so many others? No point spending the money for inspection/s unless you’ve a stake in the property, right?
Deposit comes well after too.
Some agents will ask for a deposit on the offer. This isn't a full sales contract. Just showing that you are very interested and are willing to commit to the sale.
No before signing the contract. As said by Yawhae, the real estate agent asked for a deposit as soon as our offer was accepted just as reassurance, it was held in their trust fund and eventually went towards the house we purchased when we settled.
I see, it’s a sellers market right now then. Would still be best to add the clause. Vendor will not worry if there’s nothing wrong with the property. If something is wrong, you don’t want it anyway. Fish out from the agent if the vendor will fuss about this may save a lot of heartache later on.
I would want to have a building and pest after signing a contract. As someone pointed out above, no point paying for a building and pest, then the seller sells it to another buyer.
You can always add in subject to "building and pest" condition in the contract to back out if there is any structural issue.
Wouldnt buy a house without one.
Before contract very unusual, during contract very usual.
It's to the purchasers advantage to have a clause in the contract.
It is in the sellers advantage for the buyer to have done the inspection before as then the buyer can not use the use the report to avoid the sale as it may come down to what a "satisfactory report" means. Something petty may be unsatisfactory. A stricter definition could be used.
Off the subject, I’m surprised why the state government or local council don’t make it compulsory for a building report to be mandatory and paid by the owner instead. The report can then be distributed to potential buyers at a fraction of the cost. Say $450 for a report and interested parties pays say $20.00. At least the vendor can recoup some, all or extra from the report. This then saves prospective buyers having to shell out hundreds of dollars for reports each time when inspecting properties that they’re keen in purchasing. This can add up to a large expense and gets worse if the sale falls through. Losing $20 a pop each time is better than $450.
If the buyer is not interested on an inspection report, a clause can be added to the contract with no subject to conditions….or something to that effect.
The thought of individual potential buyers getting their own reports for a building seems ludicrous.
The only concern, is finding independent, trustworthy inspectors who won’t be bribed when it comes to writing up the report (of course you could impose heavy fines, lose their license etc).Personally I wouldn't trust a report provided by the vendor considering the conflict of interest.
This, bias reports.
Yep, when we booked a house inspection prior to settlement on our house in 2006, it triggered alarm bells when the estate agent said "we use them as well". As the inspector was finishing, the estate agent gave him a slab of beer.
No complaints about the assessment of the house itself, but we had no idea about the reactive clay soil.
Building inspection is a requirement for selling a house in the ACT. Purchaser just reimburses the seller on settlement.
Seems to work well.
There are a lot of dodgy houses (and sellers) out there. A friend had two houses rejected because he had building inspections done. One of them the owner offered to drop the price to avoid it and the inspection revealed so many faults the inspector said it should be condemned and the owner had deliberately put things in the way to avoid some of the faults being found. He claimed he was selling because he had cancer - probably a lie as well.
This is how it's supposed to be. If I am buying an apple I would like to see the apple before I pay for it. So, don't tell me I can't do the same for a property.
Sounded like OP's property has something to hide.
No, its extremely unusual to do it before signing a contract. Its also a pain in the ass for an agent. Get it done after signing. You have 2 clear business days to organise a building inspection after.
Its different to your analogy that you're talking about.
Its more of; if im buying an apple that 10 other people wants, would i hire a $500 professional to make sure this apple is legit before signing the paperwork or would i sign the paperwork first to make sure its mine then i will get a professional to make sure this apple is legit, if its not, i can just tear up the paperwork and not pay for it.
How "un-normal" would it be for a potential purchaser to NOT organise an independent inspection.
Why… what are you hiding?
My experience is that it's normal to organise an independent inspection.
However, that's not what the OP is asking.
They are asking if it's normal to organise an inspection before signing a contract. My understanding is that the inspection occurs after signing the contract, with a condition in the contract that the purchase is subject to the inspection.
Wow, it's like asking "is it unusual to inspect a car before buying it?"
It's like asking that.. but buying property isn't like buying a car.
Property contracts (especially in QLD, where the OP is from) often have a "building inspection condition" that allows you to conduct the inspection after signing the contract, which allows you to get out of the purchase if the inspection comes back unsatisfactory.
I'm in this exact situation except the seller doesn't want a cooling off period. The agent is being pretty unresponsive too.
i’d walk away.
What situation?
I want to do a building inspection before signing the contract.
hmm I would be a bit worried without the cooling off period too. Can you still put the subject to inspection clause in?
not unusual at all - i’ve even put in offer “pending a building inspection” before too
Damned straight! $400 odd is cheap insurance, and stops you going through the process and getting emotionally invested and THEN finding out the place is rooted.
In my recent purchase:-
23/11 Inspection, offer & acceptance. I signed an agreement with a P & B Inspection Svc. The Agent made it clear that the property was still on the market. It was obvious though that he had stopped showing it.
25/11 P & B report done.
26/11 Contract signed and 10% paid.
8/12 Settlement, and moved in.How unusual is it for a house buyer to request a building inspection before a contract has been signed?
It's relatively common for auctions.
It's unusual for non-auction transactions.
It really depends on the buyers requirements. For instance, tf they're going to demolish the building for redevelopment, most of the time they wouldn't care. The only reason they'd do a building inspection is to give them a better negotiating position.
As a real estate agent for 5 years, sold approximately 200 properties. I've seen it happen once. Very unusual.
Reason is that if the owner decides to sell to someone else, you just lose your money for no reason at all.
Normally people sign the contract, get a building inspection before cooling off period ends (2 clear business days after receiving Form 1 and a signed contract).
This allows you to be locked in and going forward if you're happy with the building inspection, the Vendor cannot change their mind and sell to anyone else.However if you're not happy you have right to walk away without any reason.
Always sign contract BEFORE getting a building inspection
(Auction is a different story)
Can you please explain what's the difference with auction?
If you find that the building inspection is unsatisfactory and withdraw from signed contract, do you lose your holding deposit?
Auction you bid unconditionally. If you win an auction, you need to buy the house no matter what happens. (Talking generally here, theres some cases where lawyers are involved because of misrepresented information etc).
So you need to get the building inspection before you bid so have all the information before auction day, you dont want to find out your lovely $500k house has $100k worth of works after you buy it for example.
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100% usual - no point in finding defects with a property after you have signed a contract to purchase the place