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11 Reasons Why An Estate Agent Should Insist On A Property Inspection

11 Reasons Why An Estate Agent Should Insist On A Property Inspection

It is in very few cases of unsolicited approach, that is instances where a prospective buyer (or potential tenant) initiates a sale (or lease) process, that turn successful. Event in the rare cases where the approach creates interest, the furtherance of such an interest would require the property owner to agree to initiate a process to sell or lease their property. As a consequence, most transactions for sale or to let, are originated by the seller or landlord. This results in the majority of estate agents being representatives of the seller (or landlord), leaving only a few agents in the market directly representing buyers or tenants.

Irrespective of the type of transaction arrangement (mandate) an estate agents is expected to be cognisant of the needs of the buyer (or tenant) and to protect their interest in the same way that they, the agent, protects and advance the interest of their primary client, mostly a seller or landlord, without causing risk to the success of the sale or tenanting process. No wonder, in the majority of transactions, estate agents do not always insist on a property inspection because of the stress of things that may make a sale (or lease) fall through.

"An estimated 3 million property transactions are concluded each year in South Africa, and less than 1% insist on an independent assessment of condition (that is, an inspection) or commission a qualified inspector as a condition of sale."

Primarily, for this reason, though, the need for property inspection in South Africa is obligated by law, most estate agents find a way to handle this compliance requirement by passing the risk to identify things that need to be addressed to the seller or the tenant. In the case of a sale transaction, consumer protection laws, requires the seller, and/or representative of the seller, to complete an ‘disclose’ the condition of the property. Primarily for liability reasons, in almost all sale transactions estate agents pass the responsibility of full disclosure to the seller, through a seller’s declaration form or some form of disclosure template, with the hope that a seller will honestly and diligently provide full disclosure of any defects and known problems.

Letting transactions are handled slightly differently, with a little more sense of accepting the need for property inspections, however this does not always translate into full disclosure. This level of acceptance, is in part because of the nature of the relationship in lease transactions, which is generally constant and parties are contractually tied for duration of the lease, and in cases of residential letting, the Rental Housing Act further obligates certain responsibilities on the landlord.

It is, therefore, not surprising that most agents, representing sellers (or landlords), are always so stressed out when a buyer (or tenant) insist on a full independent property inspection report or an inspection by qualified property inspector.

In a desktop study conducted by Academy of Construction and Real Estate (ACRE) on behalf of www.myhomecheck.co.za, it is estimated that each year South Africa processes approximately 3 million property transactions (sale, leasing and other forms), less than 1% of these insist on an independent inspection or appoint a qualified inspector, as a condition of sale. Large majority of property transactions in the market are residential in nature and, at 0,6%, almost all residential transactions do not appoint an independent qualified inspector nor conduct an independent assessment of condition.

The questions on whether an estate agent should always insist on an independent property inspection, should be answered by what things are not expected to be in the written declaration by the owner and whether the agent is willing to lead the way in insisting on the seller (or the landlord) to undertake the process of a fully independent assessment of condition (an inspection).

Most agents don’t do independent inspections, mostly because of concern over things that may make a sale (or lease) fall through, but, at times, it is for liability reasons and, unfortunately, because of the cost involved.

Estate agents should know better. The additional work to insist on an independent inspection may save the agent from blushes of strained relationships, damaged reputation or even costly liability later. Accordingly, if as an estate agent, you, have doubts in the responses to any of the questions below, it would be advisable to insist on an independent property inspection; - Take the test

  1. The seller (or landlord) has voluntarily shared details on the condition, problems and any physical damage to the property?
  2. I have visually spotted damages/ problems to the exterior or on the inside of the property?
  3. The damages/ problems you have spotted are they common and normal issues or are they something to worry about?
  4. Have you visually spotted any damp/ moisture problems or visible water damage anywhere on the property?
  5. Does the property appear well kept or does it show visible signs of poor maintenance?
  6. Does the disclosure provided by the seller (or landlord) on the condition of the property, include any of the damages/ problems to the property that you have visually spotted?
  7. Does any of the damages/ problems that you have spotted need an expert (or another more informed person) to look at?
  8. Have the property recently undergone any additions/ alterations/ refurbishments?
  9. Are there municipal approved plans available for the property (for sales only)?
  10. Are the recent (or any) additions/ alterations included/ absent on the approved plans?
  11. Would, if you were prospective buyer, confidently purchase this property without an independent inspection report?

Once proper and honest reasons why an independent property inspection is needed are established, the question of how much does an independent inspection cost, is important, but becomes secondary to the success of the sale (or letting) transaction. The primary question to be answered should be “how can, as an agent, protect myself and my client against problems that may surface later?

Therefore, if as an estate agent have any doubts in about the condition of the property from the outside or on the inside, or the observation of the neighbouring properties in the area give you concerns area it is advisable to insist on an independent inspection.

In response to the questions above, and in an attempt to save costs, it is therefore, not recommended, for an agent to inspect their own client’s property, and not insist on commissioning the services of a qualified professional inspector. A professional inspection should provide for a full identification and general evaluation of the condition, components, and systems of the property, and a qualified inspectors is specially trained to look for things, in most case, you will miss. Therefore, unless as an agent you are also properly qualified as an inspector yourself, seek out a professional.

Thus, the practice by most estate agents, when it comes to the cost of conducting an independent inspection or hiring a qualified inspector, in majority of cases, is to pass these on (or at times it is apportioned) to the buyer (or tenant), either as part of the transaction or administration costs or a direct payment arrangement is made.

For estate agents it recommended you should insist on an independent inspection, when in doubt on the condition of the property, and this should be agreed as part of finalizing a sale agreement (or letting mandate), and ideally prior to signature of an purchase (or leasing) contract, which contract should include conditions regarding an independent inspection and the responsibility for the costs.

Article Credit: Mashilo Pitjeng

Bio: Registered Property Valuer. Chairperson Policy and Advocacy SAIBPP. Chairperson Research Committee PSCC. IoDSA Registered Member. Facilitator EAAB CPD Training - Real Estate Environment and Property Valuations. Consults on real estate asset management, property risk solutions, real estate research and transformation.

Copywrite: www.myhomecheck.co.za

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