When you’re looking to buy a house, you want to use your money wisely. There are many associated costs that come with buying property, not to mention the actual price of the house itself. It’s understandable that home buyers want to minimise their outgoing costs and only pay for things that are absolutely essential.
If you’re weighing up whether it’s worth spending a couple of hundred dollars on a building inspection, here’s what you need to know.
You could avoid a terrible purchase
A building and pest inspection is one of the most valuable services when you’re looking to buy a house. When obtained before you purchase the property, the inspection can help you avoid having to pay hundreds of thousands of dollars if it reveals extensive damage, you were not aware of that would cost a fortune to repair. A termite infestation is just one reason potential buyers reconsider buying a home. If an inspector does discover termites, the report could help you avoid making a costly property purchase, one that could have been a waste of hundreds of thousands of dollars of your money.
A building and pest inspection can help you negotiate property price
A building and pest inspection can actually work in your favour. If it reveals significant damage or a pest problem, then you may, depending on your situation, be able to re-negotiate on the asking price of the house. You could save thousands of dollars off the asking price with the leverage of a building report. Director of Rapid Building Inspections, Daniel Watts, says “We’ve had many clients thank us for our reports, as the issues we have identified have allowed them to negotiate up to tens of thousands of dollars off the price of a house.”
But how exactly do you use a building and pest inspection to negotiate on price? Here are the most important questions to ask yourself
1. Is there major damage?If you want to negotiate the price of the property, it’s best to have some understanding of how property value is calculated. Every home that isn’t brand new will have wear and tear from the previous tenant. You should take into account how severe that damage is. For example, a cupboard that has come off its hinge is a defect, but it’s a very easy fix.Examples of potentially major issues include things like:
- a termite infestation
- significant cracks or damage to the concrete stumps that support the house
- severe rusting to the roofing
- unauthorised building work
- water penetration and rising damp
- cracks to kitchen tiles, outdoor tiling, or roofing
- cracked windows, dents in screen doors or garage doors
- leaking taps
- areas of rust
- damage to the fence
- stiff doors and windows that don’t open easily
- chips or cracks in the porcelain of the toilet or bath
2. Is there minor damage?If you find any of these issues in the house you want to buy, you could negotiate a reduction based on the cost for repair. It’s a good idea to get a quote from a builder or relevant repairer and use this amount to negotiate with the seller. It may not be a saving overall, as you will still have to follow through on repairs, but it could allow you to avoid doubling up on costs by paying full price for the house.Some minor damages you might want to look out for include:
- Paint blemishes
- Damaged internal door handles
- Cracked or scuffed floor tiles in living areas
- Door and windows that don’t operate smoothly
- Missing light fittings
- Internal doors jamming
- Minor settlement cracking to walls
3. What is your purpose for buying?Investors who plan significant renovations can sometimes secure a great deal on a damaged property. Serious issues like a termite infestation could work in your favour if you’re planning to tear it down and build something new. The seller doesn’t have to be aware of your plans, and you can potentially negotiate thousands of dollars off the asking price. Major issues with the concrete stumps could also help you to save a significant amount. The seller might not have many options if their property is unsound, and this could translate to major savings for you.
4. How many offers does the seller have?To negotiate a better price on a property is just that, a negotiation. It takes some insight and skill to ask for a reduced price without overplaying your hand. One of the things that can help your negotiate the price is to gauge how many offers the seller has received. If you’re attending an open home inspection, ask yourself – how many other people were there? Did many people talk to the real estate agent in depth? Does it seem to be a popular property in a good area at a reasonable asking price?If you’re competing with too many other buyers, then your negotiations could be weakened. If you push too hard for a price reduction, then the seller may simply move onto the next applicant. On the other hand, if the seller doesn’t seem to have any other offers, you could be in a better place to start a conversation about the condition of the house and to place your counter-offer.
5. Is the seller in a hurry?Similarly, the timeline of the seller may also inform how willing they are to negotiate. Often a seller has bought a new house and is selling their current property. If their timeline is more pressing, they may be incentivised to close the sale as soon as possible. Leaving their home on the market as they move into their new property might be a costly position for them to be in. You may find that they are happy to accept an adjusted price just to deal with the situation quickly.While you can use this information to determine your negotiating power, one of the key things you’ll need to get started is a building and pest inspection. Use the inspection report to assess the property and then negotiate on price wherever you can.
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