So whether or not it’s worth doing a pest or building report is a bit of a tricky issue for house hunters and investors.
Whilst most buyers would agree it’s best to check everything out before a purchase, the cost of the inspections can really rack up.
Recently news.com.au reported that the Real Estate Institute of Australia has received a flood of complaints from prospective buyers who’ve coughed up between $500 to $1000 for building and pest reports prior to going to auction, only to watch the eventual sales price sail way past their budget.
Josh Carter from Sydney’s inner west says he and his wife paid for three lots of building and pest reports for three houses they missed out on at auction.
We paid $300 for a pest inspection and $500 for a building report for the first house which we were very keen on and were told by the agent was expected to sell in our price bracket,” he says. “However after just four bids the price soared beyond our limit and eventually sold for $1.5 million more than we could afford to pay.
Mr Carter then paid for two more lots of reports on other properties.
When we lost out for the third time I felt pretty sick,” he says. “I didn’t want to buy a place with problems, but by that point we’d paid $2,400 for nothing and I’d had enough. I started bidding on houses without doing any reports. I just stayed away from really crumbly places and only considered properties that looked structurally sound.
Eventually Mr Carter was successful at auction.
We didn’t bother doing any reports for our current house. In the end it was a bit of a gamble. I later found out that a dead tree stump in my backyard had live termites, however I called a pest exterminator to spray the house and garden and it’s all fine now.
The laws on price quoting vary between states but in NSW, where underquoting has been a particular problem, the NSW Real Estate Institute is currently having discussions with the NSW Department of Fair Trading to propose making reports freely available to potential purchasers, regardless of whether the property is going to auction or not. If introduced, the seller would stump up the cash for both reports.