For some buyers it happens again and again, leaving them thousands of dollars out of pocket. It’s the perfect storm for frustration and anger.
But no more. Reforms which began on 15 August 2016 now provide potential buyers with access to pre-inspection reports.
What needs to be recorded?
According to Nicole Unger, REINSW Legal Counsel, the new clause 33A of the Property, Stock and Business Agents Regulation 2014 requires the Licensee to record, in writing, prescribed details about certain reports of which the Licensee is aware, including pre-purchase building and pest inspection reports, and certain strata and community scheme reports.
“These amendments require a Licensee to disclose the written record to any person who requests a copy of the contract for sale for a residential property,” Ms Unger said.
“Prospective buyers, for instance, may then approach the author of a report to repurchase it after potentially negotiating a reduced fee, instead of commissioning their own report as they did in the past.”
According to Ms Unger, the new clause requires a record of a report to contain the following particulars:
a) the date on which the property or documents relating to the property were inspected for the purposes of the report;
b) whether the person who requested the report to be prepared is the client, a prospective purchaser of the property or the Licensee;
c) the name, business address and telephone number of the person who prepared the report;
d) whether the report is or is not available for repurchase by any person requesting a copy of the contract for the sale of the property; and
e) whether the person who prepared the report is insured under a policy of professional indemnity insurance.
“A Licensee is not required to make a record of any particulars that are not known to, or cannot be reasonably obtained by, the Licensee,” she said.
Ms Unger said the legislation stipulates that those failing to comply face a maximum penalty of 40 units or $4400 in the case of a corporation or 20 units or $2200 in any other case.
Being prepared pays off
Some vendors are choosing to buy a package of property reports before the property goes to market to allow interested parties to prepare themselves to make an offer on a property more quickly and cheaply than if they procured the reports individually.
Before You Bid CEO Rhys Rogers said a vendor can purchase reports up front and then the sales agent can re-sell the reports to interested parties.
“You don’t want to lose a sale because the potential buyer had time to look at other properties or changed their mind while waiting on an inspection to be completed,” Mr Rogers said.
“Having this information already at hand reduces days on market and you can get into negotiations straight away.
“You can also track who is genuinely interested in the property, because you receive an email when a report has been purchased,” Mr Rogers said.
REINSW helps with compliance
“To support agents and ensure that the new amendments are being complied with, REINSW is looking closely at ways to make the implementation easier,” Ms Unger said.
“We’re developing a new form that will be released soon to users of REI Forms Live at no charge. It will act as a template for Licensees to record any reports that have been written, of which they are aware, and will help them comply with the new legislation.
“REINSW recommends that Licensees educate all the agents in their office about the amendments – so if any one of them becomes aware of any commissioned reports, they can then pass the information on to the Licensee so they can discharge their obligations,” Ms Unger said.