So you are looking to buy a property. It’s now the 4th one you have seen that you are serious about. You have done the walk through and discussed price guides with the agent. You spent money on the last two to get a range of inspection reports (pest, building, strata, etc.) but they found no issues and you ended up not getting the property. You don’t feel like spending (wasting?) another few thousand dollars doing the same thing with this property that you may also miss out on.
The property looks sound, so what do you do?
Well, as with most things of this nature, it all comes down to your risk profile. How willing are you to take a chance that everything is “in order”? There are no real guidelines here. Most people would probably suggest that when you consider the value of the investment you are about to make vs. the cost of a few wasted reports, it is well worth the money spent (wasted?) to ensure you don’t end up with a lemon.
On the other hand, others might argue that if you are an investor who chases multiple properties on a regular basis, the cost of those reports can eat in to the profit you are hoping to realise and that there are ways to try and minimise the risk without reports. Some have suggested the usual, speak to the neighbours, drive past and sit outside the house a few times on different days, check council records, etc.
Others might also get around this need by only buying new properties that may still carry building insurance against defects.
So I guess, as is usually the case, it depends on who you are, ie, your buying profile, and it depends on what you are buying.
That said, the cost of getting it wrong can be huge. MyRate reviews customer applications regularly and tracks some of the issues found by the property valuers used. In some instances, we have seen massive external drainage issues that only became evident after heavy rain but that had an estimated repair bill of $35k! We have also seen fines from council for not having the necessary occupation certificates and others for using unlicensed builders who did things that are illegal.
All up, it is a tricky situation. Inspection reports are a form of insurance (but provide no guarantee) against defects you may only find out about when it’s too late. Paying for them might feel like throwing good money after bad but when you consider the costs if there are issues, it may be money well spent.