Chapter 1
Caveat emptor! Let the buyer beware
When it comes to buying real estate you cannot trust anyone — not the real estate salesperson, not the vendor, not the building inspector, not even your best friend. The final decision to buy and the consequences of that decision rest firmly on your shoulders. That is frightening. Very frightening! Make a mistake and it could cost you dearly for the rest of your life. You have probably heard many terrible stories about people who have made such mistakes, or read about them in the media.
There are ways to avoid becoming caught up in one of these real estate horror stories. In this chapter, I will describe the approach you should take when considering purchasing a property.
Don’t tell me — show me!
When purchasing property, you should not believe anything that others tell you — unless they can show you proof. Even then, you will need to check everything twice. Wherever you go you need to have an attitude that says ‘Don’t tell me — show me’. Whatever you are told, and no matter by whom, you should ask to see proof that what this person is saying is correct. It is not a matter of trust; it is one of accuracy.
If you are looking at a property and the real estate agent says there is insulation in the ceiling, check to see if there is. If you don’t want to climb up a ladder, have someone else do the job.
If the owners of a house you are interested in tell you that the council allows them to keep three dogs, do not take their word for it. Talk to the council to verify it.
If a building inspector tells you some work needs to be done, ask to see the problem. Then ask how it can be fixed. Seek other opinions and quotes before proceeding.
You cannot be too careful — everyone has a vested interest or agenda, whether they realise it or not.
The people you will deal with
The first thing you need to consider is the source of any information you are given. Who does it come from? How credible is this person? Why has he or she chosen to pass it on? Everyone will have a point of view to offer, including real estate agents, vendors, building inspectors and your own friends.
Real estate agents
Real estate salespeople have a job to do. They are employed and paid by the owners of a property to sell their house for the highest possible price. Salespeople do not owe a buyer any loyalty or favour; they work for the owners and that is exactly how it should be. Although salespeople may be very nice, honest, helpful people, if they are doing their job to the best of their ability, they should be putting the interests of the owners first.
If salespeople are aware of major problems that may be detrimental to the sale of a property, they must tell prospective buyers. They are not allowed to withhold such information. For example, if salespeople know a property has termites or salt damp, they are required by law to inform potential purchasers.
That is well and good if the salesperson is aware of the problem, but what if there is a problem and the salesperson is not aware of it?
Real estate salespeople are not qualified builders and are unlikely to understand building codes and standards. If they quote ‘facts’, ask them to show you paperwork or other proof demonstrating that what they are saying is correct. For example, if a salesman says a property has had all its electrical wiring replaced in the last two years, ask him how he knows that. Is he a licensed electrician? Did he inspect it himself, or is he accepting the word of the owner without verifying it? A certificate of compliance should have been issued. You should ask to see this proof.
Or imagine perhaps that a saleswoman says to you ‘Don’t worry about the squeaky floorboards— a few nails will fix them’. Her opinion is unlikely to be based on facts or on building knowledge. She may be repeating something the owner said to her, or she may really think that a few nails are all that is required. Either way, you are not willing to accept opinions: you want proof. If the solution really is so simple, why wasn’t the problem fixed before the house was put on the market? Ask her. Ask her how she knows that it only needs a few nails. Has she inspected the footings?
You would take the same approach if a salesman told you, ‘The carport roof only leaks in a really heavy rainfall; otherwise it is not a problem.’ Again, this is probably an opinion: either the salesman’s own opinion, or the owners’. Has he seen the carport roof leaking? Does he know how much damage it causes? Has he checked the foundation to make sure it is not being affected? Probably not.
‘Yes, the door does stick a bit, but it just needs a bit of planing and it’ll be fine.’ Once more, if this problem is so easy to fix, why wasn’t it addressed before the property went on sale? Find out. Ask the questions. Salespeople may be correct when they tell you that it will be easy to fix squeaking floorboards, leaking roofs and sticking doors. But what if these problems have been caused by the building’s foundation shifting or another serious problem?
Salespeople do not know. They are not builders. Salespeople are good at what they do — selling. They are not qualified to make statements to you about a property’s problems and potential solutions. You should not take their opinion as fact. Believe it or not, people have bought houses on the basis of information provided by owners or salespeople, only to find out later that this information was incorrect.
If salespeople express an opinion (which they would be crazy to do), it should be treated as exactly that — an opinion, nothing more. Salespeople who offer an opinion about fixing a building problem leave themselves open to legal prosecution if the ‘advice’ they give is incorrect. That is not something that they can afford—they risk both their credibility and their continuing employment. You would think that would make them extra cautious, but sometimes they see the dollar signs and get carried away with selling a house beyond any other consideration.
If there is a problem that you can see, you should definitely seek a professional opinion before you proceed. Even if you cannot see any problems, it is always a good idea to have a building inspection done.
When the sale is finalised the salesperson moves on. You move in.
Vendors
Vendors just want to sell their house — to anybody. They do not care to whom. They just want to move on to the next place with the minimum of fuss and the maximum return. This is why they are not necessarily going to tell you that the neighbours are awful, that the area has a high crime rate or that the dog across the road never stops barking — these problems may be the reason that they are moving out! If you learn that a small gang of children in the street is causing problems, or that the neighbour tunes his motorbike up at 3 am every morning, you may not want to buy the house, so you cannot expect the vendors to tell you these things. There is no legal requirement for them to do so; however, if you get the chance to chat with them, ask them questions about the house and the neighbourhood. Always remember, though, that their likes and dislikes may not be the same as yours. Anything they tell you should be weighed up carefully; if it cannot be proven, it is only an opinion and should be taken lightly.
You can find some information out yourself. Approach the local police station, the council, the schools and other neighbours for feedback about the street and the neighbourhood.
There are, of course, other issues that the vendor is legally obliged to tell the real estate salesperson about. The salesperson must pass this information on to you.
You must be informed of:
- any official notices, orders or charges received
- any alterations, repairs and improvements carried out without council approval
- known encroachments and fences not on boundaries
- breaches of the strata title legislation which applies in your state or territory
- the presence of salt damp or termite infestation.
These topics are covered in detail in chapter 8, ‘Understanding the paperwork’.
Remember that, like real estate salespeople, most vendors are not qualified builders. Their home could be riddled with termites and they would not know until it started to collapse around them. Vendors can only tell you what they know. They may be perfectly honest, ethical people, but if they do not know there is a problem, they obviously cannot tell you about it!
Building inspectors
Building inspectors do not care if you buy a particular house or not. They are independent agents, chosen and employed by you. They work for you, but they get paid no matter what you decide to do on the basis of the information they provide.
Do not allow a real estate salesperson to tell you which building inspector to hire. A salesperson should not even recommend anyone, because this may represent a conflict of interest. You can find a list of building inspectors in the Yellow Pages under ‘Building Inspection Services’.
Always make sure an inspector is appropriately qualified before hiring him or her. Please note that in most states, building inspectors are not required to hold a builders licence, because they are not involved in construction or building. In some states it is possible to start a business as a building inspector without any licence or qualifications or previous...
