Hidden Defects in Homes
00:00:00
Speaker
Before you buy a home, you need to hear this. Imagine stepping into your dream house. Everything looks perfect. But what if, hiding beneath the surface, there's a ticking time bomb? Termites silently eating through your walls. Toxic mold hidden under fresh paint. Your roof? Well, it's one storm away from disaster. I'm sorry to say, but this isn't fear mongering. It's a reality.
Jack's Costly Home Repair Story
00:00:19
Speaker
A Deakin University study found that almost 85% of homes inspected in New South Wales, Victoria and Queensland had at least one major defect.
00:00:27
Speaker
In some areas like Melbourne's Cranbourne West, nearly 90% of new builds were hiding structural issues. And if you missed these problems, well, you could be staring down a $20,000 repair bill, just like Jack.
Podcast Mission: Navigating the Australian Housing Market
00:00:38
Speaker
Welcome to the Buying Your First Home Podcast, your personal guide through the Australian housing market. Here we tackle the big questions and the small details that come up when buying your first home. From financial prep to finding the right neighbourhood, we're here to ensure that you've got all the knowledge at your fingertips. So let's take the first step towards unlocking the door to your new home.
Missed Issues in Home Inspections
00:01:03
Speaker
Jack's a client we've helped out recently. He's a really hard-working bloke who thought he was buying a solid home in the NT. The real nightmare started after he moved in. First, it was a gas leak. The previous owner had used cheap rubber line in the oven. In the territory's extreme heat, well it dried out, split, and Jack was left with 45 kilos of gas leaking into the house. One spa could have completely leveled the place. Then there came the plumbing. Half the pipes were cracked. But why?
00:01:27
Speaker
The heat literally melted the plastic. And on top of it, some of the fittings didn't even have plumber's tape. There were water leaks everywhere. And then there were termites. Jack's home was built with steel framing, so he thought it was safe. But the previous owners had renovated a downstairs room using untreated soft pine for the skirting boards. Termite heaven. They'd eaten through absolutely everything.
00:01:46
Speaker
Jack was furious. The seller's pest inspection report that he'd got before settlement said there were no termites. But when Jack got his pest guy out to fix it after he'd taken it possession, he found the infestation had been there for years. If that wasn't enough, well, the walls were asbestos. The previous owner had even hidden warning stickers so no one would notice.
Importance of Local Inspectors
00:02:04
Speaker
Moving it safely, well, that'd be another $10,000 bill. So clearly, thorough building and pest inspections are critical and not something you want to miss. But is it okay to get any old building pest inspector? Absolutely not. This is where local knowledge matters. In every state across Australia, you can and definitely should arrange your own independent building and pest report. While some sellers may offer one, there's no universal law requiring them to do so. So I'd always recommend protecting yourself by hiring your own expert.
00:02:31
Speaker
But going further, I'd recommend a local building and pest inspector. They don't just check for pests. They understand specific issues that area that outsiders might miss. Across Australia, different regions are going to have their own unique challenges and a local expert knows exactly what to look for and what materials are going to be most vulnerable. For example, Queensland and the NT have high termite activity due to humidity and warm climates. A local inspector is going to know whether termites are likely hiding and the materials they're most attracted to. In Victoria,
00:02:58
Speaker
Bushfire risk is a major concern and local inspectors can assess whether fire resistant materials have been used and if vegetation is being properly managed around the property. Flood, zone and draining issues also vary wildly. A Brisbane or Gold Coast inspector will know which suburbs are prone to flooding or poor drainage. These are issues that can lead to long-term structural damage or mold growth if they're not addressed. Additionally, local inspectors know common builder shortcuts. Some builders cut corners in specific ways depending on local construction trends.
00:03:26
Speaker
In Gold Coast renovations, for example, I've heard of some builders being caught using untreated timber, which can invite termites and speed up wood rot. A local inspector familiar with these trends can spot poor worksmanship. That might not be obvious to just a general inspector. Finally, council regulation and building codes differ between regions. Local inspectors understand these laws and can flag any unapproved renovations or compliance issues that could be headaches down the road.
00:03:48
Speaker
I think this is the real value out of a local inspector. They don't just do the basic checklist, you know, check for damp, that sort of things. They bring real area specific experience that's going to protect you and
Limitations of Inspection Reports
00:03:58
Speaker
your home. It's not just about finding the problems, it's about knowing which problems are likely to appear in your suburb, ensuring that you're fully informed before you purchase.
00:04:06
Speaker
What is a building in pest inspection anyway? I guess we kind of skipped over that. It isn't just a casual walkthrough. It's meant to be a forensic deep dive. Investors are supposed to crawl under the floors, climb into the roof cavities and use thermal cameras to spot hidden problems. They're looking for things like termites. Did you know Australia had over 300 species of termites and they'll eat a house faster than you can think. They'll look for structural defects like cracked foundations, rotting timber, potentially point out illegal DIY of renovations and check for moisture. Look for humidity and mold and rising down. Here's the thing a lot of buyers don't know. These reports aren't foolproof. Yeah, I actually went through a report I recently had done and it has a bunch of disclaimers. So the inspectors are going to check everything that's accessible and they can get access to the roof. They might not be able to get into the walls. They have to use one of their devices to check for moisture. They're going to look at retaining walls, but they're not always foolproof.
00:04:53
Speaker
Some of the disclaimers these reports have say that they're visual only inspections. Inspectors can't see inside walls, under floor coverings or behind stored items. If termites are hidden in the spot they can't access, you won't know until it's too late. They also don't check everything. Inspectors don't test plumbing, gas lines or electrical wiring. For jacks cracked pipes and gas leak, well it probably wouldn't have been found by the building and pest inspectors. termites can also be missed. Some reports say no visible termites, but that doesn't mean they're not there. If a seller has covered up damage or if termites are inside the walls, they may not show up. They also don't check for drainage and ventilation issues. Some inspectors will note poor drainage, but won't assess how severe it is. Poor drainage could lead to major structural problems if there's leaks and water going on the slab, for example, but you may not find out about them until the damage is well and truly done.
00:05:39
Speaker
And it can be tricky if you had a dodgy previous owner. One client we had found that under their brand new carpets that are ripping them up to change the color, there was asbestos. And that was going to cost them $15,000 to remove all these specialists vinyl from underneath that carpet. Ideally, if you can, try and be there when the Billion Pest Inspector is going through the property because you can point out and say, hey, like this looks weird. You know, that paint looks fresh on that wall. The splashback seems weird that the PowerPoint is right there. And try and highlight things that the Billion Pest Inspector may not have realized.
00:06:05
Speaker
And this is the thing, over the years, I've seen all sorts of dodgy things. Some sellers, or I guess real estate agents, depending on who it is, have a great way of covering up defects. I've seen things like rugs being pulled over multi floors, nail polish being used to fill in benches, people opening on the windows, setting a mask at dirty scent, or just a bit of electrical tape slapped on some piping to stop it from leaking. As dodgy as it is, unfortunately, when you buy the home, it's going to be your liability. So you want to take that time to thoroughly check the property.
00:06:30
Speaker
I mean, like being kind of painful can help you in the situation, opening every single cupboard, checking under the things, opening the oven, even
Detecting Seller Cover-Ups
00:06:37
Speaker
asking questions like why is this wall being recently repainted? You know, in the bathroom, look up, oh, it's strange that the you know the roof's been painted recently, was there mold damage in here? Are there issues here? And if the agent rushes you, try and use your patience to make sure you slow down, take your time because at the end of the day, you could be taking on a half million dollar, a million dollar liability in this house that you could otherwise get out of with your building pest claws. You also ideally want to take a bit of time to choose the right inspector. Usually the cheapest inspector who finishes in 20 minutes isn't going to be the right inspector for you. You want to make sure they're licensed. Generally, building pest inspectors have to be licensed and qualified builders. They have to have insurance in place that will protect you if something's been missed and you want them to have the relevant tech, thermal camera, moisture sensors, bar scopes, all those sorts of things can help you find stuff that's hidden beneath. Because at the end of the day, there is a real cost of skipping inspections.
Consequences of Skipping Inspections
00:07:24
Speaker
The agent might be saying, oh, it's fine. Here, I've got a report for you. It'll save you the $700 to get your own building and pest report. But would you prefer a $700 bill or a $20,000 termite bill? At the end of the day, this could affect your mortgage. For Jack, him chipping out his building and pest report cost him $20,000. And through no fault of his own, the building pest inspector clearly missed off his paying the price. Can this affect your mortgage?
00:07:48
Speaker
Absolutely. Banks hate surprises. A major defect or issue could cost you thousands of dollars to repair and even lower the value of your home. That could leave you owing more on your home loan than what your home is worth. And that can be the catch with building and pest reports. Banks aren't actually required to review these reports. They put the burden entirely on you as the buyer. If you discover a major issue after settlement, it's your legal responsibility to fix it up. When the bank approves your loan, they assume you've done all your due diligence and you're prepared to handle any repairs or maintenance. They are not going to step in to help.
00:08:17
Speaker
Even worse, you might think, hey, I've got insurance, it's going to be fine. Or even worse, your insurance won't cover any pre-existing defects. If the problem is already there, like in Jack's case where the termites are already present, even before he purchased a home, then the insurer can deny your claim, meaning you'll have to pay for all the repairs out of pocket.
00:08:34
Speaker
And this is where he gets so hard. Jack put all his savings towards his deposit to avoid paying lenders mortgage insurance. This meant when he found out about all these issues in his property and disaster struck, he had no cash left over to cover the costs. Not only that, he was at his lending limit with the bank, so the bank couldn't give him any more money based on the current value of the property. In Jack's case, he had to borrow money from family and put some money on the credit card to try and get these essential repairs done.
00:08:56
Speaker
I think the lesson here is you want to really try and take your time in that due diligence when you've got your finance clause and your billing and pest clause to make sure you're comfortable and everything has been covered off. I'd strongly recommend you deferring your unconditional, going unconditional and set your billing and pest unless you're 100% comfortable with that report. Delaying that and waiting for unconditional can give you peace of mind to know that you're all good or gives you the ability to leverage negotiations with the repairs.
00:09:18
Speaker
So if you have found problems, what can you do? Well, assuming you're not
Renegotiating After Finding Defects
00:09:21
Speaker
unconditional on the property yet, or you haven't settled, you can demand the seller fixes the issues. You can add conditions to your contract, say while the seller needs to remedy the repairs, the leaks, the termites damage or specialist removal before settlement. You want to be detailed as possible here. You could even give a copy of the report to the seller to say,
00:09:37
Speaker
This is the issues, this is what's been identified. I'll proceed, but you need to fix this up. Jack, for example, could have pushed the seller to cover the termite treatment costs and the specialist removal before going unconditional in his contract. Option number two is lower the price. If the seller won't do the repairs, you could use a report to negotiate a lower purchase price.
00:09:53
Speaker
One client I know negotiated $10,000 off their property after they discovered Rising Dam. Had Jack known about the issues in his home in advance, he could have factored the repair costs and adjusted his budget accordingly. Could have left him with a bit of cash left over rather than having to rely on credit cards and family. Option number three, walk away.
00:10:08
Speaker
Sometimes the best option is to use your cooling off, your finance clause or your billing pest clause to completely withdraw from the purchase altogether. If Jack had had time to receive a bit more of a thorough investigation highlighting the termite infestation asbestos risk, I'd say he would have chosen to walk away rather than and go your ahead with the purchase.
00:10:24
Speaker
If you do negotiate a lower price and want to do the repairs yourself, try and get some quotes in writing. With trades being a real shortage at the moment, you might just assume, oh, it's like a thousand dollar job to fix up, but it could cost a lot more. Jump on Seeking Services is one of those things to get some quotes just to work out what it's actually going to cost realistically, just so you're not making assumptions. So if you do find issues, it's not the end of the world. You can negotiate effectively to help yourself avoid any unexpected costs and financial strain to ensure you knew home is a true dream and not a disaster.
00:10:51
Speaker
So as you can see, you definitely want a building pest report done independently to make sure your home's covered. This can include apartments as well. Some people choose to get it just to ensure there aren't any unidentified issues with the building, concrete cans, all that sort of stuff. Local knowledge does matter, so make sure you do a bit of research into your building pest inspector rather than just using the one you might use.
00:11:10
Speaker
At Hunter Galloway, we're the home for home buyers across Australia.
Finance Help from Hunter Galloway
00:11:13
Speaker
If you want some help with finance, we help home buyers, first home buyers, upgraders and refinances anywhere in Australia. So hit us up, we'd love to help you out at huntergalloway.com.au. And until next time, we'll see you guys later.