Mandatory Building & Pest Inspections

The new Property Price Statement is now live, with vendor reserves showing for any auction or sale by set date from the 16th of October onwards.  You can check out an example on realestate.com.au here.

Real estate has traditionally operated on “caveat emptor”, Latin for “let the buyer beware”.  A principle that places the full burden of due diligence on the purchaser. The State Government’s has a new proposal that could change that.

The proposal is a mandatory pre-purchase building and pest inspection scheme for Victoria. Sellers would need to organise an inspection before sale and make the reports available to interested buyers.

The upside is clear.

Combined building and pest reports cost around $500 to $600, half of all buyers pay for multiple inspections while finding a home, and about one in six buy blind with no inspection at all, often because of the cost and hassle.* One shared report could end that duplication and get more buyers informed.

The risk is independence.

When the vendor commissions the report, the incentive can tilt towards the sale. There is also a concern that vendors or agents could “shop around” for a more favourable report, creating a false sense of security for buyers. And even with better standards and clearer definitions of major and minor defects, an inspector’s analysis will always involve some subjectivity.

Until 30 October you can have your say on the proposal, including on the timing of inspections, burden of costs and managing integrity risks and conflicts of interest. We will definitely be sharing our feedback on the scheme!