The Best $500 I Ever Spent - Are Property Inspections Worth The Money?
When buying a house in Australia, you will often have the option of having the property inspected by an independent property inspector prior to the sale proceeding. This can sometimes be an expensive undertaking, but it can potentially save you a lot more in the long run.
When my wife and I decided it was time to leave the rental rat race and buy our own home, we were pretty inexperienced in the property market. We went to a few open homes, then found what we both agreed was going to be our little project.
A house that was lacking a little bit of TLC, but everywhere we looked was potential. From the timber floors which would come up beautifully with a fresh sanding and polishing, to the huge bedrooms, and the bungalow out back. In short, we fell in love with the place.
So we made an offer, the owner counter offered and after some to-ing and fro-ing a deal was struck. We debated at this time, whether we wanted to pay to have the property inspected, after all, we'd had a good look around, and we'd seen the flaws, as well as the potential after repair right?
Not wanting to rush into things, we sought counsel from our friends and family, many of whom said the place had potential after seeing photos online, however urged us to spend the money on the inspection. Just to be safe.
So we engaged our chosen property inspector, at a cost of around $500, to go through the place with an eagle eye and tell us all about it.
I doubt I will ever spend a better $500. When we received the property inspection report, all 27 pages of it, it read like a Stephen King horror novel. Our dream project, was looking like a money pit. The recommendation of the report was that it would take approximately $50,000 to resolve all the issues with the property, the worst of which was the drainage issues beneath the property and the missing structural support pier under the house. These two things alone would bear significant cost before we even started on the things we wanted to do.
gif courtesy of Giphy.com
After much discussion, and an unwillingness on the part of the owner to re-negotiate the price of the property, we decided to walk away from the deal.
A month later we found another property, in much better shape for not much more than the first one, and the property inspection on this one turned up no nasty surprises.
In all that almost $500 outlay for the report saved us thousands of dollars, and years of heartache.
If you're buying a new home and have the chance to have an inspection done, I would highly recommend it.
You know of what you speak.
I don't know if it would have mattered or not, but a business partner and I bought a building that had once been converted from a home into an office space. I say we, but I really wasn't in on the negotiations. I just knew that the little hole in the wall we were renting without any cooling system wasn't working for me anymore, even if it's location was better than the one we would me moving to.
The building served us well for quite a few years, but after a while, it became apparent that it was starting to list to one side. This was after my partner had decided to leave (this wasn't the reason though). So I was left with the chore of figuring out what to do.
Fortunately, we had a very good year in 2010, so I decided it was now or never to try to renovate. So, basically, everything except for the kitchenette on both floors were torn down to the studs. Roof and shingles were replaced along with the gutters and the doors. Inside, all new everything, including electrical wiring. After it got fresh coats of paint inside and out, it turned out pretty good.
In order to solve the leaning problem, we had several piers put in that went down to the bedrock around the southwest corner of the building. They leveled it out and made it stronger than it was before.
That renovation and repair cost over $100,000 for a building that ended up appraising at $135,000. Then we sold it for $105,000 (at that point, after over two years on the market, we were just happy to get out of it).
So, I don't know what we would have done had we not initially bought the place, but with the money I eventually put into it, we could have at least had a good start on a new building and financed the rest or something. And potentially in a better location, too.
It's quite scary how easily that people can fall into these traps. When you first see a property, it's easy to fall in love with it and overlook some flaws. Even our current place (which the property report gave us the all clear on), now that we've been in it for a few years, there are things we would have looked at differently.
Wanna play a game ?
Whew! I was on the edge of my seat at the beginning of this story, wondering if you had, indeed, gotten yourselves into a disastrous situation. Good to hear that you avoided that money pit and found another, much better, place to call home. (Really like the crumbling house gif!)
Thanks for stopping by to comment, we certainly feel like we dodged a bullet with that place.
We had a bit of a challenge with the Real Estate agent when it came to getting our deposit back though, but we did get it back in the end.
All's well that ends well. Good thing you got your deposit back.
I lived for a few months in Melbourne, and was surprised to see a house being sold by people standing on the sidewalk bidding on it.
Thanks @sparkesy & @davemccoy