building inspection..not good.

I have placed an offer on a property last week subject to pest, building and finance and the offer was accepted.:)

Pest is good and finance is ready to go at the price accepted. :)

I met with the builder today and the report is not the best.:( I knew the property had the usual wear and tear. paint, carpet, cupboards etc...and I was happy to accept that as i feel i got it at a good price.
The report has structual damage, due to water running under the property the ground has collapsed in parts and needs underpinning in one area and drainage to be installed under the house.:eek:

The roof tiles are leaking and the gyprock on the ceiling is stained.

The rear stairs and retaining walls need demolishing and rebuilding.

this is what the builder has told me and he will email me the full report tonight.

I am booked in to sign contracts with my conveyancer tomorrow afternoon.

What is my next step?? do i go to the conveyancer?? or do i go to the real estate first to re negotiate?? :confused:

If i am successful in a renegotiation and i borrow more money to fix these problems is the interest on the borrowed money tax deductible???

thanks
 
Underpinning can be very expensive,got one quote of $75,000 from http://www.uretek.com.au/ last year (Ridiculous)

Just get out of the contract,leave it for the auction where it will probably only go for unimproved land value price as lots did in the Ipswich / Redbank area .

Make sure you get the builders report in time ,they have the right to ask for a copy :(

If you want to renegotiate,ask for another week or two to get quotes.
 
I have placed an offer on a property last week subject to pest, building and finance and the offer was accepted.:)

Pest is good and finance is ready to go at the price accepted. :)

I met with the builder today and the report is not the best.:( I knew the property had the usual wear and tear. paint, carpet, cupboards etc...and I was happy to accept that as i feel i got it at a good price.
The report has structual damage, due to water running under the property the ground has collapsed in parts and needs underpinning in one area and drainage to be installed under the house.:eek:

The roof tiles are leaking and the gyprock on the ceiling is stained.

The rear stairs and retaining walls need demolishing and rebuilding.

this is what the builder has told me and he will email me the full report tonight.

I am booked in to sign contracts with my conveyancer tomorrow afternoon.

What is my next step?? do i go to the conveyancer?? or do i go to the real estate first to re negotiate?? :confused:

If i am successful in a renegotiation and i borrow more money to fix these problems is the interest on the borrowed money tax deductible???

thanks
By the sounds of things this may well be a knock-down and rebuild,find the land value and work out what it is worth less the demo and removal costs
just the underpinning and plumbing costs could well go above 15-40k,plus water damage and white ants go well,or just walk away and start again very easy to say "no",imho willair..
 
What is my next step?? do i go to the conveyancer?? or do i go to the real estate first to re negotiate?? :confused:
You exercise your cooling off rights. Go to the conveyancer and have them do it for you if you don't know how. But make sure you rescind any contract you may have signed when you paid the 0.25% deposit. Or if you have not signed (as it sounds like) - just let everyone know you are not going to.

If i am successful in a renegotiation and i borrow more money to fix these problems is the interest on the borrowed money tax deductible???
Yes. But don't even think about it.:eek:

Run a mile and don't look back.
 
get the quotes to repair the problems , get three , if you can , total the potential cost, and start negotiating the price again,

then call me for some very inexpensive solutions that you can do to repair most of the damage, realy i see it as mostly easy stuff,
 
Actually, I bought a property that fell through on Building because of the recommendation for under pinning. My builder said otherwise. Got an outside builder to check it out aslo and both reports said nothing about underpinning. Made a quick 50k there!

However, by the sounds of this one there are grounds -excuse the pun - for concern.
 
I totally agree,there are lots of good houses out there:)

People for some reason get emotionally attached to buying even if the results of the reports come in advising against it :rolleyes: and voodoo, with respect, is exhibiting those tendencies. You want to make it work - you have a time investment also in that you looked and looked to find it and then sweated over the negotiations.

You spend the $400-500 to see if it is safe to spend the many $100K's of your's and the lender's money. It is to be viewed as insurance. Now you need to write off making any further investment in a dud property. Move on.
 
get the quotes to repair the problems , get three , if you can , total the potential cost, and start negotiating the price again,

then call me for some very inexpensive solutions that you can do to repair most of the damage, realy i see it as mostly easy stuff,

craig, I know where you're coming from - but you're a builder mate.

For what it is worth, I am the son of a builder. If voodoo did not see on first inspection that this building was in trouble, then at a guess I'd say, probably voodoo is not up to your ability to apply some easy fixes either ;)
 
thanks for the advice,
I will wait until i get the full report, have a good look at it, get a few quotes and sign nothing as yet....

craigb, its good to see your positive about the situation. I am dissappointed but still positive at the moment, I am in the construction industry and a few concrete piers and drainage are a simple task for me, (except i have to break a sweat) but it costs money and thats why the re negotiation....I just need to fix the existing damage and divert the water from going under the house in the future.

no i am not emotionally attached to this property, I can see the potential in the property and it has a good return.

I just didnt know weather to go to the R/E or the conveyancer??

but i will not be rushing into anything, i will do my homework... and I will let you all know the outcome..

cheers
 
Hi Propertunity,

yeah i didnt see the damage on first inspection as it is a 2 storey house and the door was locked to get underneath. I did request to the R/E that i specifically wanted another look to get in there, thats why my offer was subject to B/I..
 
I have placed an offer....the offer was accepted.:)

I feel i got it at a good price.

Perhaps the Vendor thought the same thing, hence why they accepted your Offer.

Perhaps you are just getting up to speed and the Vendor already knows exactly what the damage is worth and has already factored that into the price that they accepted.....in which case, your "re-negotiation" will wither and die if you're up against a strong Vendor.

Never seen a Vendor sign a building clause where the specific wording in the clause gives the Purchaser the right to go back and automatically lop a few K off the agreed price. 99.9% of the time it is either 'walk away' or 'the benefit of the clause lapses'.

Maybe your specific clause is different....in which case if the Vendor has accepted it, you're up against a fool, and you may as well hook right in.
 
Make sure you get the builders report in time ,they have the right to ask for a copy :(
Only if you've accepted a poorly written clause. If the clause says something like "to the buyer's satisfaction at the buyer's absolute discretion" rather than the pathetic "major structural defects" clause (don't let anybody convince you to go with that turkey), then I don't see that they have any right to see the building inspection which you've paid for. If it's on the grounds of "major structural defects", the situation may be different, in that you may have to prove such defects exist.
Never seen a Vendor sign a building clause where the specific wording in the clause gives the Purchaser the right to go back and automatically lop a few K off the agreed price. 99.9% of the time it is either 'walk away' or 'the benefit of the clause lapses'.
I don't know where so many buyers have come up with the idea that your building inspection is an opening to renegotiate price. When you have a "subject to building inspection" clause - even a well-written one ;) - it gives you the right to walk away if you're not happy.

There's a huge difference between "subject to building inspection" and "the vendor warrants that the building is free of any defects", which most buyers seem blissfully unaware of.
 
Only if you've accepted a poorly written clause. If the clause says something like "to the buyer's satisfaction at the buyer's absolute discretion" rather than the pathetic "major structural defects" clause (don't let anybody convince you to go with that turkey), then I don't see that they have any right to see the building inspection which you've paid for. If it's on the grounds of "major structural defects", the situation may be different, in that you may have to prove such defects exist.

I don't know where so many buyers have come up with the idea that your building inspection is an opening to renegotiate price. When you have a "subject to building inspection" clause - even a well-written one ;) - it gives you the right to walk away if you're not happy.

There's a huge difference between "subject to building inspection" and "the vendor warrants that the building is free of any defects", which most buyers seem blissfully unaware of.
However you have to prove that there are problems and that's where them asking for a copy of the report comes in.
I don't agree with it,however that seems to be the way it is.
Other wise people will use it for a GET OUT OF JAIL FREE CARD:eek:
 
When you have a "subject to building inspection" clause - even a well-written one ;) - it gives you the right to walk away if you're not happy.
That is true.

I don't know where so many buyers have come up with the idea that your building inspection is an opening to renegotiate price.
I think it comes from the perspective that, if you get an unsatisfactory report, you are certainly entitled to walk away. However, the report may have for example:
1. A leaking shower base
2. A few leaning stumps that need replacing / repacking
3. Some downpipes that are not connected to the stormwater etc.

So rather than just collapse a deal, it is sometimes (most times) easier just to renegotiate the price to account for these things or have the vendor do them at their own expense.

We do this all the time on properties we buy for clients.
 
Hi Propertunity,
yeah i didnt see the damage on first inspection as it is a 2 storey house and the door was locked to get underneath.

OK that makes sense - my apologies on casting aspersions on your experience :eek:

We had ordered a building report on a property a few years back. This was after a couple of inspections with the REA who never found a key that would open a door downstairs to get under the house.

Building inspector turned up with the vendor in attendance. Inspector asked for key to get access to door downstairs.Vendor said he had not seen it for a while and never went in there. Inspector said "no worries, I'll fix that" and pulled out a long screwdriver to lever the door open :p. Vendor suddenly remembers where the key was and opens up..........

Lots of snakes in glass aquariums, mice being breed for snake food...you get the picture :rolleyes: And as it turned out - a rather large termite nest.

So you just have to think that some vendors hide things :cool:
 
However you have to prove that there are problems and that's where them asking for a copy of the report comes in.
I don't agree with it,however that seems to be the way it is.
Other wise people will use it for a GET OUT OF JAIL FREE CARD:eek:
If it's "at the buyer's absolute discretion", there's no need to prove any problems. If worded that way, it is a "get out of jail free" card. ;) So is "subject to finance", really - we all know you can manufacture a finance refusal if necessary. (Even though I agree that would be unethical and fraud.)
However, the report may have for example:
1. A leaking shower base
2. A few leaning stumps that need replacing / repacking
3. Some downpipes that are not connected to the stormwater etc.

So rather than just collapse a deal, it is sometimes (most times) easier just to renegotiate the price to account for these things or have the vendor do them at their own expense.

We do this all the time on properties we buy for clients.
With respect, my friend, this is exactly the process which I consider unethical. Unless you're buying a brand new house, every building is going to find some small items like this which need doing. When it's not a new house, your offer should reflect that you're aware that a building of that age is going to require some minor maintenance.

The building inspection clause should be used to protect you against any major works, far in excess of what should be reasonably expected in a house of that age; it shouldn't be used to reduce the price for every item of maintenance. Your offer shouldn't have been based on the building being perfect and requiring zero maintenance. All of the above items fall within what's reasonable, IMHO, for an existing building of more than a few years' age, and so should be absorbed within your offer.

I think that renegotiating based on such trivia is treating the "subject to inspection" clause as a warranty, which it's not intended to be. And because so many buyers use the clause in this manner, vendors become reluctant to agree to "subject to building inspection" clauses.

When I'm the vendor, people with a "subject to building inspection" clause either buy at the agreed price or walk; those are their two options. I wouldn't sell to anybody who tried to renegotiate price on this basis, as trust would be destroyed, because I wouldn't consider that they'd dealt with me in good faith.
 
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