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You don’t save money without Due Diligence

July 8, 2017

"It’s only natural that buyers want to save money on the costs associated with their property/development investment."

 

“They shop around for legal/conveyancing deals, builders, real estate agents, and so on” I have witnessed, “Sometimes, especially on newer properties or when it comes to building contracts, they decide that the recommended valuations, finance clauses, pest and building reports are an unnecessary expense.”

 

I have been in the real estate industry for over 16 years and involved in building and development during and prior to that and as a duty of care I always advised that purchasers and developers should never take anything for granted even on new properties, "especially on new properties".

 

I suspect “Most real estate agents have a story or two of purchasers that were wiser after the event.”  “You may have a large deposit and/or several assets but if you don’t get the OK from the Bank you just can’t build or buy.”

 

“The fact that a property is new doesn’t mean that a purchaser should bypass the pest report. White ants can enter even a new home if a tradesman has been careless. They have been known to enter via formwork that has been left around concrete steps, for example. Reports that cost a few hundred dollars could save thousands even tens of thousands of dollars if the damage turns out to be extensive.”

 

I tell buyers to make sure they use licensed trades people that have professional indemnity insurance.  Ensure they are members of professional building or builder accreditation groups, contact consumer affairs or check the NT Civil administration registrar for past rulings and if in doubt ask the builder for the contact details of their previous clients and locations of past homes or developments.  

 

"Contacting past clients can save you thousands of dollars and provide you with feedback, peace of mind and awareness of any concerns that may arise due to communication issues."

 

“There should be no question of the buyer/client being out of pocket as long as the tradesperson is covered if they fail to analyse building faults that later become apparent.”

 

“If your finance is approved but building and pest report does uncover a problem that doesn’t automatically mean you should pull out of the sale. One way to approach the issue is to re-negotiate the sale price to allow for repairs. Prudent builders and developers usually see the wisdom of making adjustments to retain their purchaser. Sometimes the builder or developer will prefer to arrange for a licensed tradesman to carry out the work before settlement transfer takes place.”

 

Even a termite infestation or disparaging soil tests, doesn’t necessarily mean a purchaser should pull out of the deal.

 

“A surprising number of homes in the top end have had termites at some stage. It’s a case of quantifying the damage and taking a calculated risk. However, in the case of serious structural damage which is often unquantifiable it is usually safer to give up the idea of purchase no matter how much you like the property.”

 

“The ultimate choice is up to the purchaser/client, valuations, building and pest reports are a tool for assessing the property’s value, structural condition and ultimate suitability. In most cases they enable purchasers to reinforce the feeling that they have made the right choice.”

 

 

Many agents and builders like to throw around the term “Caveat Emptor” the principle that the buyer alone is responsible for checking the quality and suitability of the product. However even houses and building developments operate under federal Australian consumer Law (ACL).

 

Contact Consumer Affairs or seek professional legal advice if concerns arise.

 

 

 

 

 

 

 

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