building inspection..not good.

[Propertunity]

With respect, my friend, this is exactly the process which I consider unethical.

Well, I may not be your friend for much longer if you think that .

Look Tracey, I understand your position, I just happen to disagree with it. The vendor is under no compulsion to renegotiate anything after an attempt by me to have a price reduction or have a fix made at their own expense. They can say 'no' if they so choose. Then it is up to me as to whether or not I want to proceed to exchange.

The reason we hire a building and pest inspector (most times) is that we are not experts in that field. We would have made an offer based on what we see through our own eyes and forming an opinion on the property's worth to us. If an expert comes along and opens our eyes to problems we did not know existed, then in my view, the property just went down in its worth to me....and my attempted reduction in the price I'm prepared to pay, will reflect that.

I am very one-eyed in this process I agree - one of the job hazards of being a BA and NEVER (hopefully) being a vendor.

 

[Pa1nter]

If it's "at the buyer's absolute discretion", there's no need to prove any problems. If worded that way, it is

Do we use that with the building / Pest clause
That a good thing,very handy for moments of madness

 

[Perp]

Look Tracey, I understand your position, I just happen to disagree with it.

Fair enough. I just think it's a bit disingenuous to claim after a building inspection - with wide-eyed innocence we know you don't possess - "oh gosh, what a surprise! The building's not perfect? We couldn't possibly pay what we offered before, now that we've had the devastating revelation that we need to connect a downpipe to the stormwater!"

But I also acknowledge that many "otherwise ethical" people play this game, and that you have a duty to get the best deal for your buyer.

My buyers are pre-warned, if they want a building inspection clause, that their only option is to withdraw, and if they're going to withdraw, they'd better be prepared to justify it. And of course I don't let buyers pull that "at the buyers' absolute discretion" nonsense on me!

 

[battler]

My buyers are pre-warned, if they want a building inspection clause, that their only option is to withdraw, and if they're going to withdraw, they'd better be prepared to justify it. And of course I don't let buyers pull that "at the buyers' absolute discretion" nonsense on me!

How would they justify it and what would be acceptable justification?

 

[Perp]

How would they justify it and what would be acceptable justification?

Based on my lawyer's advice as to whether their reason for withdrawing would stand up in court.

 

[willair]

Do we use that with the building / Pest clause
That a good thing,very handy for moments of madness

In Queensland and depending on what sort of contract the re company has in place,it's very simple to understand,on page 6 under Property
Inspections,clause 4.1-4.4,..
clause 4.3
If any inspection report specified in clause4.1 is not satisfactory to the buyer,the buyer must,prompty upon receipt of the inspection report,give notice to the seller terminating this Contract,The buyer may however,waive the "Benefit" of this condition at any time prior to terminationof the Contract..pure and simple.
.
That's why imho never ever let any agent get the slice of your investment$$$$,prior to settlement,let them get in line with everyone else,it's a"MUGS"GAME SELLING REAL ESTATE,the agent has stuff all control,he or she is only a voice box,the power is within the vendor and the buyer,or if the re thinks he or she has total control,their name is never on the title deed,anyone who signs a contract without paying for
independent legal advice prior to making an offer is like a wood duck
in side show alley waiting to be shoot down..
imho willair..

 

[Pa1nter]

Sounds like you people could get into a fight here

 

[MTR]

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.

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??

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

Hi Voodoo
we purchased a property with a poor building report, structural damage due to water damage on limestone footings, cracks from top to bottom, scary stuff.

We got a quote for repairs we re-negotiated purchase price, and ended up getting a free house only paying for land value. Purchased 15 years ago for $185K, sold it 2 years ago for $1.325M

Sometimes you can actually make money from these properties but it will come down to getting it at the right price and getting the right advice regarding work. Another issue I found was there were many options on rectifying the problem from builder, engineer, architect, costings from $40,000 to $5,000. We went for the cheaper option that worked.

I will have to admit that I did lose sleep over this one at least the reward at the end was worth it.

Cheers, MTR

 

[fokas]

And of course I don't let buyers pull that "at the buyers' absolute discretion" nonsense on me!

Let me guess....you of course, do put that into your contracts?

 

[Perp]

Let me guess....you of course, do put that into your contracts?

Well of course!

But in my defence, I only use it to walk away if I need to, or to negotiate on major issues, not as an opening to revisit the purchase price and have a "second bite" at getting a good deal based on trivia.

 

[battler]

And of course I don't let buyers pull that "at the buyers' absolute discretion" nonsense on me!

Well of course!

But in my defence, I only use it to walk away if I need to, or to negotiate on major issues, not as an opening to revisit the purchase price and have a "second bite" at getting a good deal based on trivia.

How do you as the vendor, use this to walk away when the purchaser put it in the contract?

 

[VYBerlinaV8]

I went through this just a few weeks ago. Found a property I wanted, negotiated a good price, but then building report found structural problems. At this stage I was still 'no money down', so I simply called the agent, said there was a problem and sent through a copy of the report (to provide to the seller).

Seller, agent and I all met at the property and had a good look with my builder there. Builder gave me a number, I added 50% contingency, and simply reduced my offer by that much. Seller chose to take it, and we completed the sale and reno's begin next week...

Done fairly and sensibly, this can be turned into a win/win. The thing, though, is to be open and honest, and to share information. Of course, I hadn't exchanged when I went though this.

 

[vbplease]

Well of course!

But in my defence, I only use it to walk away if I need to, or to negotiate on major issues, not as an opening to revisit the purchase price and have a "second bite" at getting a good deal based on trivia.

Ozperp, Maybe you should quantify what is the difference between "taking a second bite", and negotiating for a major issue? a dollar value?

 

[Perp]

How do you as the vendor, use this to walk away when the purchaser put it in the contract?

As the vendor, unless there's a significant issue that couldn't reasonably have been anticipated, my position is that you continue or you cancel, but I won't drop the price for things like Propertunity mentioned.

Ozperp, Maybe you should quantify what is the difference between "taking a second bite", and negotiating for a major issue? a dollar value?

Hmmm... hard to put a dollar value on it, but basically, I think it's reasonable to expect that there'll be a few minor maintenance issues, perhaps up to a few $K, with a house that's more than a few years' old.

If it's obviously derelict, you bid accordingly - you don't offer a price which takes into account that it's derelict, then say "oh, that was if the property was in perfect condition, now I want it for less" when the building inspection comes in.

I guess the hard thing is quantifying where the line is between these two extremes. To me, active termite infestations, needing to replace beams or joists, underpinning, unsafe electrics that can't be made safe without spending many $K, etc, all qualify as issues which I think you could reasonably use to walk away, or negotiate the price down (if the vendor's willing).

But I loathe people who try and negotiate you down for stuff like a small tree needing to be removed because it's overhanging the roof (which could be seen and is no big deal), or because a light switch is broken, or because the exterior needs to be repainted. All these things are either knowable prior to offer, or part of routine maintenance, or both. (And I've seen people try to negotiate on all these points.)

Put it this way, if your intention prior to getting the building inspection is to look for things you can use to negotiate the price down, you're probably on the wrong side of the line, IMHO. You should expect that they'll find things. You don't have a right for every little thing to be fixed. You should only be looking for "nasty expensive surprises". (Again, IMHO!)

 

[Propertunity]

To me, active termite infestations, needing to replace beams or joists, underpinning, unsafe electrics that can't be made safe without spending many $K, etc, all qualify as issues which I think you could reasonably use to walk away, or negotiate the price down (if the vendor's willing).

Agreed 100%

But I loathe people who try and negotiate you down for stuff like a small tree needing to be removed because it's overhanging the roof (which could be seen and is no big deal), or because a light switch is broken, or because the exterior needs to be repainted.

Yes agreed again.

You and I both know that a building inspector will (if he's any good) pick up for example, every cracked tile - and I'm not about to turn that into a price negotiation or collapse a sale because of it.....except this one time ......a (stupid - to his vendor) selling agent let slip to me that the vendors were desperate and would do anything to keep the sale standing. As you know as a BA I am contracturally obligated to my buyer client to get the very best deal that I can for them......so I did...... and the vendor fixed everything in the building report at their own expense. My clients got a near perfect 50 year old house on settlement. But this is more the exception that the rule.

I have a long list of REAs that I would never use to sell a house but I like to buy from them.

 

[voodoo]

Good discussion guys..
I received my report today and it mentions every crack, flake of paint and mark on the premises..but as i said earlier my offer was to cover all this stuff, paint carpet, fly screens, cracks etc
My offer did not cover unseen structual piering, due to poor drainage.

cheers

 

[Perp]

Good discussion guys..
I received my report today and it mentions every crack, flake of paint and mark on the premises..but as i said earlier my offer was to cover all this stuff, paint carpet, fly screens, cracks etc
My offer did not cover unseen structual piering, due to poor drainage.

Oh yes, of course, I think your position is entirely reasonable.

Sorry - you've caught me hijacking and turning the thread into a philosophical debate not directly related to your situation... ooops! Sorry.

 

[vbplease]

I received my report today and it mentions every crack, flake of paint and mark on the premises..but as i said earlier my offer was to cover all this stuff, paint carpet, fly screens, cracks etc

Voodoo, it's the B&P inspectors duty to note every little fault no matter how trivial they are.. but also note, that their disclaimers always remove themselves from any legalities, so don't expect any recourse...

Hmmm... hard to put a dollar value on it, but basically, I think it's reasonable to expect that there'll be a few minor maintenance issues, perhaps up to a few $K, with a house that's more than a few years' old.

Ozzie, I agree with what you're saying.. I guess the only comment I can make is that when deciding whether an issue is worth renegotiating i.e. quantifying if it's "taking a second bite" or a major issue, is not worrying if I offend the vendor.. really do you care?? it's all about business in the end.. emotions should be left out of it..