NEED TO KNOW
A pre-purchase property inspection is the buyers’ key to one of the most valuable pieces of information about the property they are about to purchase: the CONDITION.
The ‘condition’ of the property is always one of the biggest deciding factors for property buyers the world over, yet in South Africa we estimate that less than 1% of the 350000 annual property buyers, opt for a ‘condition’ report by a professional home or commercial inspection company. These stats are very worrying and in our experience, reflect the high instances of deferred maintenance we observe in our inspections for the average R1m -R2m property, sold in South Africa. If more properties were inspected during the sale process in South Africa, the condition of the average property would improve because the buyers’ market would demand better quality. On the other hand, if the ‘condition’ report, commonly known as a home inspection, were to be done before listing or sale by the seller, not only would the overall condition of the average property improve, but the average asking price would increase as well in relation to the increasing number of maintained properties. Therefore, the overall property market would benefit with a better product.
Sadly, the current situation is that many homes have deferred maintenance issues, which is far removed from the above ideal, most of which need repairs, upgrades and even replacement of major systems or components vital to the function of the property. Understandably, vitally important maintenance of components and systems at these properties remain unfinished or not even done because of lack of funds due to increasing costs associated with electricity and water. For the fortunate few who have additional capital, funds allocated to maintenance often get diverted to alternate power and water sources just to save on utility costs, and often these installations are not installed well which require even more much needed resources to work as they should.
Having a pre-sale / pre-purchase inspection culture for property transactions in South Africa would better serve the average South African in debt management and more importantly more people would be aware of maintenance and repair costs associated with owning a property. By default, then, more properties would be maintained since maintenance and repairs would have been part of the financial planning during the purchase process.
Two of our core values at Home Inspection Services South Africa are to educate the public and influence change in the property market. In keeping with these values, we would like to highlight a few of our key services related to this topic.
Due to our ethical practices, we never work with any other service providers in the property industry, since this would put into question the ethics of the information obtained and reported through our inspection and reporting process. Being in the industry exposes us to many real estate agents who are repeatedly asked by their customers to recommend or refer reputable home inspectors when their sellers list properties. So it happens that due to our reputation in the industry, as honest and thorough property inspectors, that our details are often given to sellers, and buyers, wanting to use our services. We feel that the pre-listing inspection is one of the most useful inspection tools in the seller and skilful agents hands to properly ascertain the condition of the property to best decide on the strategy for sale. The valuable information gleaned from our inspection and report gives the seller and agent opportunity to plan on the necessary repairs or gives them a list of disclosure items to pass on to the buyer as is necessary with the new consumer protection act. We have found that when the seller and agent repair any defects noted in this pre-listing inspection, then the property can fetch full price, and sometimes even higher depending on additional improvements. The seller and agent are more confident in the sale process as they can pass the inspection report on to the prospective buyer, so that there is full disclosure on all repairs if any, or if they decide to leave some issues for the buyer to repair. If the seller and agent have the resources, an additional inspection and report can be done after the repairs are done so that a ‘clean bill of health’ can be issued to any prospective buyer.
A wise estate agent would sell the benefits of such an inspection, or even pay for it themselves when there is a sole mandate, to reduce the likelihood of buyers making use of their own home inspectors or making suspensive conditions in the offer to purchase process.
Similar to the pre-listing inspection, the buyer now can hire our services before making an offer on a prospective property, or they may exercise their right to include a suspensive clause in the offer to purchase contract, essentially making the offer to purchase subject to the favourability of the inspection report.
Where the estate agent has a mandate, best practice would have ensured there was a pre-listing report available to hand to the buyer, thereby possibly eliminating unnecessary timewasting and expense toward an equitable purchase process. However, the pre-listing inspection or report is most of the time not a feature yet, due to the culture currently embedded into this psyche of this industry, which we are trying to steer into a more pro-active, pre-listing inspection scenario.
Annual Maintenance inspection
Once a property is sold, this is when all the wheels normally fall off, as most or all the service providers who keenly facilitated the sale / purchase process are no longer vested in the wellbeing of the homeowner. This is when the insurance companies come into play. Unfortunately, few are there to assist the new homeowner in making wise decisions during the twenty odd years of bond payments. Very few homeowners know that the insurability of their property is subject to fine print in the insurance policies. The biggest problem we see, relating to the fine print, is where insurance companies are not willing to pay out claims that could have been prevented by the homeowners regular and proper maintenance of the property.
WHAT WE HAVE SEEN IN OUR EXPERIENCE
We recently had a very unfortunate situation where a property close to one of our offices had a noticeable lean on the roof. We stopped by and warned the owner that if maintenance and repairs were not done soon, that the roof would fail or even collapse. Within 6 months of that warning the roof collapsed, damaging all the furniture in the building, thankfully no-one was in the building when the roof collapsed. This person had faithfully paid their bond and insurance all the years leading up to the catastrophe, yet the insurance refused to pay out due to deferred maintenance on the property. This is most unfortunate, and often seems unfair, but the fine print rules applied here, the property was supposed to be maintained to a point that these kinds of problems would not occur. Had the homeowner read the fine print, which most of the time does not happen, or as further precaution listened to our warning, this costly affair might not have happened. It is for this reason, and to assist the homeowner with keeping their most valuable possession in the best order, that we have an annual maintenance inspection service. Traditionally the maintenance inspection is for sectional title complexes, multi-level buildings for their 10 year maintenance plans, for property investors, landlords and homeowners who were able to set aside funds each year to have their properties inspected so that when they were to sell, their properties are well maintained fetching the best prices.
However, this service is fast becoming an essential service for homeowners who need to comply with their insurance requirements.
YOU WILL BENEFIT
In conclusion, it makes sense that everyone cannot be prepared all the time for all possibilities, and that services such as these presented here may not be affordable for some. However, in the spirit of transparency and improvement in the property industry in South Africa we offer these comments and recommendations to the individual or company that sees the benefit in these services and wishes to make use of them for their benefit.
It is our experience that the vast majority of individuals, companies and property professionals who have made use of one or more of our services, have benefited greatly. We also believe that discussions around these services, in as many sectors of this industry as possible, will foster improvement in the industry and will eventually benefit all invested in the property market in South Africa.