Relief in sight for costly househunting headache
Homebuyers can spend thousands inspecting properties they never purchased; this is a costly part of the due diligence process that faces a major rethink.
Under legislation the Victorian Labor government plans to table in 2027 if re-elected in November, the burden of pre-sale construction and pest inspections will shift from potential buyers to sellers.
Under the offer, sellers will be required to prepare and pay for reports before placing a property on the market, and the reports will be made available to all potential buyers.
Currently, most buyers arrange and pay for their own inspections when competing for the same property; If they miss the auction or negotiations fail, we face snowballing costs.
Building and pest inspection reports can cost a total of $500 to $600, according to research from the Center for Consumer Policy Research cited by the state government.
The research found that nearly half of all buyers pay for more than one inspection before buying a home, while one in six pay up to $4,200 for seven or more inspections.
Reviews can be very important in purchasing decisions, as 11 percent of buyers decide not to make an offer after reviewing a report.
Despite its build-or-break nature, around one in six home buyers are blindsided and purchase an uninspected property, often due to cost.
Prime Minister Jacinta Allan said: “The status quo is not working. Some buyers spend thousands of dollars on multiple reports. Some roll the dice and fail.” he said.
“When you buy a car, the dealer pays for roadworthiness. It has to work the same way when looking for a home.”
The government plans to consult with industry stakeholders and its counterpart in the ACT, the only jurisdiction where property owners must pay for inspection reports.
Sellers are required to issue pest and building inspection reports three months before the sale, except for certain types of properties, including new construction.
Reports must meet certain standards, and sellers can recover costs from a successful buyer once the contract is signed.
The Allan government’s proposal would include measures to prevent poor quality reports and conflicts of interest, and recipients would still have the right to prepare their own reports.
