In today’s real estate market, numerous building & pest inspection companies offer “cheaper” inspections by conducting them for the vendor or the agent and selling the reports to multiple interested parties. While this may seem like a cost-effective idea, there are significant risks associated with buying a shared inspection, which could end up costing you thousands of dollars more in the long run.
1. Potential Conflict of Interest:
First and foremost, it’s crucial to understand that when you purchase a shared inspection, you are not the inspector’s primary client—the homeowner is. This means that the inspection report may be tailored to favor the seller’s interests. Failed inspections are unlikely to be disclosed because, as of now, there is no legislation mandating that every home seller must provide an inspection report. It’s essential to consider where the potential conflict of interest lies in this situation.
2. Qualifications and Regulation:
Secondly, not all inspectors are equal in terms of qualifications and expertise. The absence of a governing body in the building & pest inspection industry results in few checks and measures on inspector qualifications. For instance, the Real Estate Institute of Victoria (REIV) now requires inspections to be conducted by a registered builder. If your inspection was carried out by an unregistered inspector, you may not have legal grounds to exit a contract with a failed report. This lack of regulation can put buyers at a significant disadvantage.
3. Inspection Quality:
Thirdly, many inspectors may overlook crucial issues due to various reasons, such as lack of experience, conducting too many inspections simultaneously, rushing through the process, or simply differing levels of competence. It’s important to remember that, like your buyers advocate, conveyancer, and mortgage broker, your building inspector should be solely focused on representing your interests. A thorough inspection takes time, and rushing through the process can result in missed problems.
Case in Point:
For instance, we recently received a damning report from our building inspection company on a home our clients were considering bidding on. The inspection revealed that the property needed extensive repairs, including a full deck replacement, retaining wall repairs, and replacement of windows due to a bora infestation. The estimated cost of these necessary repairs exceeded $100,000.
Before the inspection, we had valued the property at $1,150,000-$1,200,000. However, the inspection findings quickly reduced our valuation to $1,100,000 at best. Unfortunately, at the auction, the property sold for well over our revised valuation, and the winning buyer was in for an expensive surprise upon settlement.
Conclusion:
In conclusion, it’s essential to remember that good things are rarely cheap, and cheap things are rarely good. When it comes to building & pest inspections, thorough due diligence is vital. Ensure that the inspector is registered and that the inspection is conducted solely for you, without any other influences that could compromise the accuracy of the report. In the world of real estate, making informed decisions can save you from unexpected expenses and disappointments down the road.
