P&B Inspection before 0.25% deposit?

Hi,

I am buying my first IP in NSW and in a dilemma as to whether to get P&B Inspection and Strata search done before putting 0.25% deposit or after. I have made an offer 2 weeks ago, paid 0.25% deposit, paid to get inspections and report done, and then had to pull off during the cooling off period (thus losing 0.25%) coz there were some issues (body corporate suing the builder, lots of building defeats, etc).

So now I am not sure whether I want to make an offer and pay the deposit of 0.25% and then get the inspections done and accept that I could lose 0.25% if there are issues with reports OR make an offer and get verbal acceptance and then goes off and do all inspections done BEFORE putting down 0.25% but also accept that I may not get the property if someone else signed the contract before me.

In terms of numbers, if I miss out on the property, the cost for me is:

Do inspections/reports first with solicitor = $900
Pay deposit + Do inspections/reports = $2000

But if the B&P and strata comes back ok, but someone else signed the contract during the time that i was getting B&P done, is it worth going through the hassle all over again for another property just because I didnt want to spend $1000 on deposit?
 
How confident are you that you are on the money in terms of your offer? And how confident are you that there isn't someone else out there who loves the place and is likely to offer more than you? You can do the P&B first, but run the risk your offer won't even be accepted. I guess it depends on the market you are in. Doing the P&B first is more likely to work in a buyers market.

On another note, $900 sounds like a lot for the P&B. Sounds like your lawyer might be adding in some margin there.
 
I'm pretty confident that the price that I am offering is right and fair. I'm offering $370 and similiar properties were sold for $360 - $375 in the area. (The vendor paid $350 when he bought it brand new 4.5 years ago.) However, the REA kept pushing for $380 and I told him if someone wants to pay for $380 then so be it. He rang me back and asked for $375, but I am not going to offer above $370. The REA said he is going to show the property to more ppl this weekend (fair enough) if I didn't sign the contract and offer $375 at least.

I also think my lawyer is adding some margin; $280 for the strata report and $550 for the b&p report. But his company promised there is no legal fee until my pruchase is settled. If you know better deals, would you mind sharing please?

Speaking of which market, are we currently in a buyers market? Some say we are, but some say we are not just yet.
 
Having not purchased in NSW, I might be off beam here, but can you not sign a contract "subject to B&P with results to satisfaction" or whatever?

Then if the B&P comes back and you're not happy with it, walk away?
 
Having not purchased in NSW, I might be off beam here, but can you not sign a contract "subject to B&P with results to satisfaction" or whatever?

Then if the B&P comes back and you're not happy with it, walk away?

NSW is not as enlightened as some of the other states. In NSW you pay 0.25% to 'take the property off the market'. If you walk away within the cooling off period, you lose the 0.25% regardless.
 
I'm pretty confident that the price that I am offering is right and fair.

What does right and fair mean, anyway? And the seller doesn't have to accept. I'm not saying overpay but be aware that just because you're offering what YOU think is a fair price, you can still miss out.
 
I understand what you are trying to say, alexlee. Part of me thinks $5k is not much when it comes to serviceability and repaying loan but part of me doesn't want to give in to the REA. And it's going to be my IP so I have no emotional attachement to the property. If I don't get this one, there are plenty more in the market (just have to scarify my weekends to do inspections :p)

Anyway, if you were me, would you sign the contract and pay 0.25% deposit there and then before the reports are done if the vendor came back and accepted $370?
 
Hi wobbycarly, no, you lose the 0.25% deposit coz the vendor had to take the property off the market for you. I did ask my solicitor and REA whether I could get the deposit back, and they both said no. :(
 
I understand what you are trying to say, alexlee. Part of me thinks $5k is not much when it comes to serviceability and repaying loan but part of me doesn't want to give in to the REA. And it's going to be my IP so I have no emotional attachement to the property. If I don't get this one, there are plenty more in the market (just have to scarify my weekends to do inspections :p)

Fair enough. But just realise that the risk is that you might miss out.

Anyway, if you were me, would you sign the contract and pay 0.25% deposit there and then before the reports are done if the vendor came back and accepted $370?

My personal preference would be to sign, pay the 0.25% and get the reports done in the cooling off (definitely extend the cooling off, though). If you're not too picky about the place, you'd only crash the contract if something was really, really wrong, which would be fairly rare.
 
Thanks for your reply, alexlee. I will let you know how I go. :)

Empty Pockets, I have read/heard the same thing from many people on this forum. Would love to know how many strata properties you have purchased without P&B and had absolutely no problem further down the track. b&p report is just $550, so I don't mind paying for it if it proves to be useful.
 
Hi there,

I have purchased a few strata units and only ever did the strata report/search.

I work on the basis that if there is a serious building issue then it would come up in the strata search (meeting minutes / agenda items) which would then lead me to do further investigation.

Could also have a look where the sinking fund money is being used also as an indicator.
 
Empty Pockets, I have read/heard the same thing from many people on this forum. Would love to know how many strata properties you have purchased without P&B and had absolutely no problem further down the track. b&p report is just $550, so I don't mind paying for it if it proves to be useful.

Purchased 4 since 2007 and one in 2001. No P&B done in any.

But this is my comfort level, if you don't mind paying and feel more at ease carry on. Just be mindful because your unit/townhouse is okay doesn't mean you escape the costs of repairs or building works to another persons unit.
 
If you are in a position where your in no hurry and are prepared to lose places to get one at the right price, then you are in our exact position.

Id recommend getting the property off the market asap, if you dont, you might end up 10k out of pocket if you have to outbid anyone (if not much more), and also, you may lose another 5+ properties before you can get a price you want, and that will cost you more than the 0.25% anyway.

I might have a different view if it was a house, but there isnt much that a B&P inspection could pick up in a unit imo.. the building itself might have structural issues, but hopefully that will be in the strata report, or will be obvious to the naked eye.

Big Disclaimer.. its different if you actually suspect something is up, for instance the first place we were keen on had illegal renovations, and the Strata Report was really useful to us, it was on the market for a long time because of the strata/council mess... Also another unit we saw last week had massive issues, a full engineers report had been done and its covered by insurance thus far, but if I was going to bid on that one, id really want a Strata report at least... but even then nothing is for sure, friend of mines unit managed has somehow kept their building defects out of the strata minutes for years.

Anyway ive only been looking 1-2 months, and own no property, so take my advice for what its worth! But what im finding is that its really hard to get a good price, vendors are still expecting big growth on their units, so ive backed away from reports for now, since were now pretty used to letting go property we really like (even though most of them are still sitting on the market).
 
Thanks for your comments, guys. I've made 2 verbal offers (one vendor wants 5k more, the other vendor wants to have a bit more time to decide (til this afternoon)) and I still haven't signed anything. But I am not in a hurry and I am sure something will come up soon enough.

I have, however, decided that if I get the offer accepted at the price I want, I will be signing the contract and putting 0.25% down before the strata search. That is unless of course like adso said, I suspect something majorly wrong with the property.

Anybody who says and thinks property investing is easy couldn't be more wrong.
 
If something is seriously like structure wall damages inside the unit, than strata will repair this. If there is major water leakage coming behind the shower tray into the bedroom then this is not covered by strata mgt. Owners's cost. So make sure you always checked the bedroom door next to the bathroom as we inspected a few property where water is leaking into the bedroom and stained onto the carpets.
 
Seems like a lot to me. A combined P&B is $450 inclusive GST. We don't charge for every contract we review.

We take an initial fee of $110, we review the first contract if successful $110 is credited towards your conveyancing cost at settlement if not successful the amount is not credited towards your conveyancing fees however, we review 2 more contracts for you free of charge until you exchange.

Balance of our fees and disbursements payable on finalisation of your matter.

Our total conveyancing fee with disbursements & GST is competitive around $1,100.00 for everything except reports and stat enquiries.

I have a huge amount of experience in property law to give you an idea I acted for large corps i.e. I did the conveyancing for Australia Square Sydney before opening up my own firm.

Given you all seem to have done this many times over I really appreciate everyones feedback on our pricing structure. Experienced property lawyers, fantastic service and we call you back! many happy clients.

Let me know.
 
Back
Top