Listing your home or investment property for sale without a building or strata report could cost you thousands.

Consumers expect transparency and convenience when making a purchasing decision. Buying a home is often the most significant purchase someone will make. In this series, we explore the importance of completing a building or strata report prior to listing your home for sale.

1 WHAT IS A BUILDING AND PEST INSPECTION

A building and pest inspection is an assessment of the property's condition. It is conducted by a qualified inspector who reports on areas of concern such as rising damp, leaking bathrooms, faulty roofs, and other building defects. They also include a separate report that identifies if active termites or termite damage is evident.

2 WHAT IS A STRATA REPORT?

A strata report is an inspection of the Owners Corporation Records. It is generally recommended for buyers when purchasing a property in a Strata Scheme, Company Title, or Community Association. The financial state of the Body Corporate, including proposed strata expenditure, AGM Meeting Minutes, Strata By-Laws, Insurances, defects, and disputes are identified in the report.

3 TRANSPARENCY

When buyers are made aware of any potential issues prior to negotiating they will be more confident when making an offer on the property. From minor defects in houses to the balance of the administration and sinking funds on an apartment, buyers are more confident to engage in a negotiation when they have full transparency. Most properties have some type of minor defect that buyers are willing to accept. It's the major defects that can jeopardise your sale. By identifying issues prior to advertising you can choose to rectify the issue prior to the sale campaign or leave them and show full transparency of their existence with potential buyers.

4 ATTRACT MORE BUYERS

Buyers are often interested in several properties and the ones that require less outlay for them to complete their due diligence will elevate that property to the top of their list. When buyers know that a report is readily available they are more likely to consider your property over others. This results in more buyers competing to purchase your property. Pre-sale reports are available for buyers to download immediately enabling a hot buyer to move quickly on your property.

5 SAVE TIME

If you have multiple buyers interested in your property, do you really want multiple building inspectors visiting your home to complete inspections? If the property is tenanted this may also cause delays in gaining access.

Strata inspections can also often be delayed and can take up to two weeks to be completed. If the strata report is left to the buyer to arrange during their five-day cooling-off period this could cause unnecessary stress and delay if the report is not completed in time.

6 LESS STRESS AND A BETTER PRICE

Imagine you have accepted an offer on your property however you don't have a pre-sale report. During the cooling-off period, the buyer completes their own report and identifies issues that you were unaware of. You may find yourself in a situation where you have to pay to fix the issue or the buyer requests a reduction on the price. Worst case the buyer rescinds from the sale and the property has to be resold again. Generally, your next best buyer won't be as strong as your first so you may have to consider a price reduction. If the inspection was completed up front and provided to the prospective purchaser then there would be much less chance of them rescinding from a sale.

7 A WIN-WIN FOR SELLER AND BUYER

There are currently many platforms that allow buyers and sellers to share the upfront costs of these inspections with the assurance that the warranty of the report will remain with the eventual purchaser.

Platforms such as "Before You Bid" allow sellers to make a small payment for the initial report with the prospective buyers making a contribution to access the report and the actual purchaser paying the final amount and having the warranty of that report transferred to them. The buyer can still make the decision to arrange their own inspection. If a buyer purchases a property and they find a defect that should have been picked up by the inspector at the time of the inspection, they may be able to claim against the inspector’s insurance.

Case study

A seller of a home in Hornsby engaged Heimat to sell their home. The seller engaged the services of Before You Bid at a cost of $99.00. An independent inspector was assigned to complete the inspection. On inspection, some minor defects were found. Heimat arranged a qualified tradesman to rectify the issues. Evidence was provided to the inspector who then updated the report accordingly. A more major defect was identified which was a leaking bathroom. Quotes were obtained to remodel the bathroom, however, a decision was made to leave the bathroom in its current state and allow the buyer to make their own decision on the course of action. During the 4 week auction campaign multiple buyers inspected the property and downloaded the building inspection at a minimal cost of $49.00. Some buyers were satisfied with the cost to rectify the bathroom and some decided not to pursue the property. On the day of the auction, a buyer wanted to register to bid and was able to download the report on the spot. They registered and this helped to create further competition. The house sold above reserve and all interested buyers relied on the independent report. The successful purchaser then paid another $450 and the report and its insurance were transferred to the successful buyer.

The owner was satisfied to invest in the report and sell the home with full confidence that they had addressed any potential issues. There were no stressful surprises for the seller during the campaign. The buyer was able to easily access the report and bid with confidence at the auction. A win-win for both seller and buyer.