Advice about pre-auction building inspection

Ok, so here's the deal. Interested in a free-standing property which is about 50 years old. It seems crazy not to get a building and pest inspection done BUT I'm struggling to justify spending the $600 or so when we have very little assurance we'll actually be the successful bidders.

I have done the following to help myself thus far:

1) Asked the agent about offers prior to auction - no go :(
2) Asked if any other purchasers had done inspections and if so what the results were -waiting to hear.
3) Asked outright if any defects/infestations are known - waiting for reply. I don't think in Victoria there's an obligation to disclose, unlike the proposed new laws in Tassie.
4) Sought advice about terminating a contract following an auction (when we do the inspection) if defects are found. I'm pretty sure we'll be told it's not possible.

Any other ideas? I did think of bringing an inspector to the auction and if we win, have him do the inspection before we sign the dotted line!

I know some people will just say "spend the $600", but it's just too much money to me to waste when the property market is so unpredictable and we're likely to be outbid on the day.

Thanks so much for any advice.
 
I know some people will just say "spend the $600"

How much is this place going for? In the grand scheme of things, $600 is nothing if your the winning bidder, also it is worth every cent if there are building defects etc.

The building and pest, along with your other research should form a part of the puzzle which you use to set your price range.
 
Skuri,
Here's a thought, tell the agent you like the house, but out of principle wouldn't spend money on B+P inspection on a house you don't have a contract on. How about the vendor pay for the inspection which is then disclosed to all bidders..
...and whether a building inspection should be done or if it's craziness to even contemplate NOT doing one. :D
For me not getting a b+p inspection isn't an option, unless it's a unit. I've seen plenty of examples where it's broken a deal or given scope for further negotiations where the costs of the inspection is recouped and a whole lot more..
 
Skuri,
Here's a thought, tell the agent you like the house, but out of principle wouldn't spend money on B+P inspection on a house you don't have a contract on. How about the vendor pay for the inspection which is then disclosed to all bidders..

.

And if the agent refuses to come to the party wait till auction day and in a loud voice before it starts in earnest ask "why won't the seller provide a building report? What are they hiding?".

Condition the agent to this outcome so s/he will know what to expect next time you ask for one at an open house:D
 
2) Asked if any other purchasers had done inspections and if so what the results were -waiting to hear.

Not in the other party's interest to disclose the results of an inspection they paid for. You might try to suggest to the agent you are willing to split the costs of an inspection with someone else (not sure how that works though...)

Cheers,

The Y-man
 
I know some people will just say "spend the $600", but it's just too much money to me to waste when the property market is so unpredictable and we're likely to be outbid on the day.

I really see 2 options at this point:

1. only look at properties that are not on auction (or better, passed in)

2. do the inspection yourself. This might sound radical, but there isn't a lot of magic or tools involved - a ladder, a torch, an electrical tester (the type that gives green or red lights by plugging into wall sockets). preparedness to get dirty (crawling under the floor looking for rotten stumps and termite tracks), and some knowledge of what to look for (water damage, aforementioned termy tracks). Don't do anything silly (like actually going up into the roof cavity)!!

Cheers,

The Y-man
 
Any other ideas? I did think of bringing an inspector to the auction and if we win, have him do the inspection before we sign the dotted line!

...and if you don't win, you plan on not reimbursing him for his time?

The reality is, if you're up against other parties at the auction, chances are they have properly done thier due diligence. And that means they've undertaken the B&P and they're in a much better position than you to know what the property is truly worth.

You can take the gamble and bid on it, assuming nothing is wrong, but I would never put myself in the situation where I was in a bidding contest with someone who knew much more about what something was worth than I did.

It sucks spending money on a B&P only to see the auction bids sail well above your limit, but it's a cost associated with acquiring property - even if it's not on the property that you ultimately acquire...
 
The reality is, if you're up against other parties at the auction, chances are they have properly done thier due diligence. And that means they've undertaken the B&P and they're in a much better position than you to know what the property is truly worth.

It actually suprised me that the IP I purchased at auction a couple of weeks ago, I was the only one who did a B&P inspection. :confused:
 
Until the law changes and vendors are required to provide b/p reports from an independent body (probably govt approved suppliers) it's an unfortunate cost of conducting DD on any property- auction or otherwise.
Given that in a sellers market many buyers will first sign a contract of sale and then conduct a b/p during the cool off period, they also run the risk of forfeiting their 0.25% as well any costs incurred. The process of buying property isn't cheap, even when you're sadly unsuccessful :(

My suggestion would be to spend the money as it's a form of insurance that you're not buying a lemon. I've heard far too many horror stories over the years of buyers skimping on DD costs and regretting their inaction later. When you consider that you're spending usually half a million dollars or so, $600 isn't much in the scheme of things. Just be sure that you're being realistic about the price in the first place and you've done your homework on local values and likely sell price.

Another option is to take your concerns to the vendor and see if they will consider splitting the cost beforehand- it's not an option that is often agreed to but you never know your luck :)

Happy bidding!
 
Until the law changes and vendors are required to provide b/p reports from an independent body (probably govt approved suppliers) it's an unfortunate cost of conducting DD on any property- auction or otherwise.
Given that in a sellers market many buyers will first sign a contract of sale and then conduct a b/p during the cool off period, they also run the risk of forfeiting their 0.25% as well any costs incurred. The process of buying property isn't cheap, even when you're sadly unsuccessful :(

My suggestion would be to spend the money as it's a form of insurance that you're not buying a lemon. I've heard far too many horror stories over the years of buyers skimping on DD costs and regretting their inaction later. When you consider that you're spending usually half a million dollars or so, $600 isn't much in the scheme of things. Just be sure that you're being realistic about the price in the first place and you've done your homework on local values and likely sell price.

Another option is to take your concerns to the vendor and see if they will consider splitting the cost beforehand- it's not an option that is often agreed to but you never know your luck :)

Happy bidding!

I agree, for that exact reason i decided to get one done today for an up comming auction.
 
One way that could work so to not lose on this when buying (not in Auction) is to just always subtract the costs before you make your offer or final bid. So for example if you decide you will make an offer for $250,000 on a property then only offer $249,500 to cover $500 for the inspections. You have to keep it as the last thing in your mind to subract and be not thinking I will offer $249,500.
 
Thanks

All good thoughts. Thanks very much for your considered comments. It's a truly sucky system in VIC but isn't changing in the near future.

For this property we've decided to pass on it, even though I loved it. The agent's refusal to get back to us (about this and other matters) makes me suspicious that they're hiding something and it's all just too hard....

Next time I'll use some of these ideas though. Thanks again! :)
 
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