Frustrated buyers are ignoring unfavourable building and pest inspection reports in a bid to beat the competition in a rising market, industry experts have warned, while some buyers are not even ordering the pre-purchase checks.
In February, the country experienced the fastest growing property prices in almost two decades on CoreLogic data, with capital cities and even regional towns recording increases.
The limited number of properties on the market is barely meeting a buyer demand that is bursting at the seams after a long year of restrictions that suppressed buying and selling for weeks at a time.
The sheer amount of competition has forced prices up quickly but it is also catching out many buyers who barely have time to order building and pest inspections.
Jerry Tyrrell, founder of Sydney-based building inspections company Tyrrells, said inspection reports were up 30 per cent over the year as buyers rushed in, but not all buyers were heeding the reports’ findings.
“Sometimes they don’t have any choice; they get the report, it says a few negative [things] but they still have to proceed … because it is really a sellers’ market,” Mr Tyrrell said.
“Often the buyers have to put up with it because there are so many other buyers who will buy it no matter what.”
Even in Adelaide, a 1950s dilapidated cottage with its walls propped up sold for an eye-watering $2.05 million – $750,000 above reserve.
The selling agent, Daniel Oliver of Harris Real Estate, said while this particular home was beyond repair, many buyers were forgoing building and pest inspections altogether on other properties in order to move on a property in time.
“The market is that hot that no one is even bothering getting them done, which is even worse,” Mr Oliver said, adding that the rush of buyers often meant they were only accepting unconditional offers.
“They have to be prepared to buy a property in the few days of it going on the market.”
Many buyers who are pressured to transact and do not bother to conduct these reports are being urged to exercise more care by OH Property principal and buyer’s agent Henny Stier, who said in a hot market almost anything sells.
“What’s selling now is houses with steep topography, near electrical pylons, that normally you wouldn’t touch,” Ms Stier said. “That’s why in a strong market like now there is a disproportionate number of problematic houses on the market because now’s the time to sell them.
“Even a building and pest inspector told me to be careful. This is now the time where you put houses with termite damage for sale because people aren’t doing their checks anymore. They’re under pressure to transact.”
In one instance, the worst street in an upper-north shore suburb had five homes on the market. “They know it’s their get-out-of-jail card,” Ms Stier said.
“You know what’s interesting? This happened in 2017 and within a year or two those properties were being sold again because people bought a lemon.”
Buyers in Melbourne are just as desperate to buy, according to PPI owner and inspector Mick Sanders, who has had to knock back jobs due to an influx of buyer requests.
He said “quite a few people” have bought properties regardless of what the building and inspection report contains.
However, buyers stopped short of purchasing a home when it came to major structural problems and excessive ground movement, Mr Sanders said.
Because of the market’s sheer speed, Brisbane-based David K Lawyers principal David Krishnan said, buyers need to negotiate generous timeframes and deadlines when it comes to the exchange of contracts.
“The risk buyers are running at present is that a contract signed today for a certain price does not maintain that price in 30 days’ time,” he said.
“Sellers are being approached by buyers who miss out, offering higher purchase prices … if given the opportunity to terminate a contract as a result of a buyer’s default [if they can’t get finance], sellers are jumping at those opportunities as there are back-up buyers sitting on the sidelines.”
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