Pest and Building reports - A better system for NSW

Following is a copy of my submission to Matt Brown MP for the Review of Vendor Disclosure for Residential Property Sales in New South Wales:.

Dear Mr Brown,

As requested in your correspondence of 14 July 2010, please accept this letter as my submission for the Review of Vendor Disclosure for Residential Property Sales in New South Wales.

I have been a real estate buyer’s agent in Sydney for more than 10 years and in that time I have regularly had discussions with potential buyers who are angry at having paid unnecessarily for pest and building inspections during the pre-auction process. In the majority of these cases the buyers were clearly misled by selling agents and vendors into believing the property was in their price range only to find out on auction day that the property had been significantly underquoted thereby leaving them out of the auction bidding and out of pocket several hundred dollars for property inspection report costs.

Given that it is quite reasonable for buyers to need to go through the auction process multiple times before becoming a successful purchaser (even when underquoting doesn’t occur), buyers end up paying hundreds, if not thousands of dollars in reports creating a flawed system that urgently needs to be addressed. I support the Australian Capital Territory (ACT) system and believe a comparable approach should be introduced in NSW complete with regulation standards and legislation which gives the buyer a legal recourse in the event that there is misleading material in the reports provided.

By putting the responsibility onto the vendor to provide current pest and building reports of an appropriate and recognised standard it creates a more transparent real estate environment for all. Those sellers will become buyers and in turn will experience the same benefits that such a system provides. The benefits won’t just be extended to buyers looking to purchase a property that is for sale by auction it will also speed up the transaction process and reduce the amount of gazumping that goes on with properties that are listed as for sale with a price. This system if introduced will benefit every buyer of every property in NSW. In addition, potential buyers will have saved hundreds, if not thousands, of dollars in wasted reports when they fail to purchase at auction. I struggle to find a valid reason as to why such a system shouldn’t be immediately introduced particularly given its success in the ACT.

In my role as a buyer’s agent I often end up guiding many of my purchasing clients through the sales process of their current home whilst I am finding them a new one. One of the things I recommend they do is obtain a building and pest report to put on display when they sell their home. The main reason for this is to speed up the transaction process and demonstrate to buyers that they have nothing to hide about their property. The majority follow my advice in this regard and the feedback from buyers has always been positive.

Other reports and documents that should also be considered for the vendor to provide as part of the sales process include:
• a strata report for buildings that are governed by a strata scheme;
• a building certificate certified by council to confirm that the structure is approved and complies with the Local Environment Plan and Development Control Plan;
• a current survey report; and
• an asbestos report - as required in the ACT.

In summary:
• Buyer beware - YES;
• Buyer misled and deceived - NO.

Yours sincerely,

Patrick Bright
Real Estate Buyer’s Agent