Why Pre-purchase Property Inspectors Need to Be Licensed 9

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Tuesday, June 9th, 2015
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Here’s an unfortunate fact: in Australia, only one state requires a pre-purchase building inspector to be licensed and that is Queensland. In every other Australian State, almost anyone can set themselves up as a pre-purchase building inspector.

You don’t have to be a genius to figure out how things could go wrong having an unregulated industry such as the building inspection industry. The unfortunate part about it is that many home buyers are unaware that their pre-purchase building inspector may not be properly trained or have the credentials to spot serious defects. The potential for massive financial loss would eventually fall on the purchaser if they received a report from an inspector who has not picked up defects.

The risks of building inspectors not having professional indemnity insurance are obvious. Now it goes without question that property buyers need to ask an inspector if they are insured. At least if the inspector fails to find a costly fault, both the inspector and purchaser will be covered. With over 40 per cent of property pre-purchase reports ending up in a dispute, this is something to consider very seriously.

The majority of building inspectors will have a builder’s trade, but it’s not a necessity in setting up a pre-purchase inspection business, and in NSW having a building inspection license was abolished by the state government in 2009, which is ludicrous! Despite continuing lobbying for this to change it remains the same and is falling on deaf ears.

To do the job properly, a qualified building inspector will have extensive knowledge of the Building Code of Australia, the Building Act, the Building Regulations and various Australian Standards in the construction industry, and will have come from a building trade background. Without this knowledge how could anyone even consider trusting someone to inspect the purchase of a home? Unfortunately it does happen and many litigation cases result.

Pre-purchase inspectors need to understand all building trades, from gyprocking to tiling, roofing and even landscaping. They also need to be able to back up and stand by their reports should a conflict come up about the report, even if the vendor or real estate agent tries to persuade them otherwise or it goes to court.

Vendors and purchasers should also take into account that some inspectors specialise in certain areas such as mould or asbestos; inspections in these areas are highly specialised and requires protective clothing and equipment.

Inspectors need to document every detail and be able to back it up in a court – many an inspector has been sued for something not detailed properly.

Here are a few warning signs for property buyers to be aware of when looking to engage a pre-purchase inspector:

  • Research the internet for any bad feedback, including the inspector’s own website for positive feedback
  • Visit your state government website and do a license check
  • The pre-purchase industry does not have any regulated or standard fees; rule of thumb is the cheaper the report the less inspection/reporting is carried out. The minimum report should be at $400 to maximum $1,000 depending on the experience of the inspector and size of the property
  • Stay away from reports already to purchase; it is better to hire your own independent inspector
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Discussions
9
  1. Mick

    Finally an article on the pre-purchase building industry. Legislation is required to fix this industry up.

    Registration should be compulsory, which includes Professional Indemnity Insurance.

    Minimum educational qualification should be a Diploma of Building or Building Surveying plus 5 years industry experience with compulsory testing by the VBA in Victoria or the equivalent in other States.

    Will it happen, No , so go get your report from an inspector who previously made pizza's for a living until he/she bought into a franchise to do inspections.

  2. Malcolm Findlay

    Agree with what you say, and the 40% of property inspections that end up in litigation is the reason why I will not provide this service.
    Another reason is the huge increase in my professional liability insurance if I carry out these inspection reports.

    Its just not worth the effort, for the few inspections that I would carryout in Regional Victoria.

  3. Joel Roberts

    That pre-purchase inspectors are not required to be licensed in order to operate is simply ludicrous. The purchase of a home is often the biggest transaction many consumers will make in a lifetime. They deserve the peace of mind that only an inspector who knows their stuff can guarantee.

  4. Branko Mladichek

    Great article Ryan.
    As qualified and accredited building and timber pest inspector in Victoria with over a decade of experience my opinions are coloured slightly differently.
    Firstly I don't believe that licensing will do more to stop or weed out bad inspectors any more than it has done with builders. After witnessing thousands of defects in new homes by registered builders and their reluctance to fix or improve I am sceptical of the powers of registration.
    Your point about professional indemnity insurance is absolutely valid not only because of the safety net it provides but also because a reputable insurer will not cover inspector until it is satisfied of inspector's qualifications, experience and training.
    Insured inspector will also be required to produce reports to insurer's approved format thereby achieving conformance with AS 4349.1 & AS4349.3 The point is you should not be dealing with uninsured inspector.
    I have seen inspector's web sites listing mission statement in lieu of qualifications,how is diploma in business relevant to pre purchase inspection?Qualifications, experience, equipment and track record is all important and there is no substitute for owners dilligence

  5. Brett Bates

    Queensland also leads the way in recognising that different levels of formal training qualification should align with the different classes of building licence they issue. The days when your average chippy or bricky knew enough about building to give them anything other than a trade licence for their area of work has well and truly arrived. The post trade Certificate IV Building is an entry level qualification in Queensland as it should be. In all other states, including NSW, this course is being peddled by private RTO's with little veracity in terms of how they actually assess an individuals claims about their 'prior learning' experience. Basically they pay for a 'fast tracked' qualification that allows them to obtain a full builders licence with no restrictions. We need a much better way such as Queensland's or an avalanche of pain is headed toward Fair Trading and NCAT in NSW over the next few years as the amount of defective and incomplete works that will surely arise as a result of this stupid experiment with deregulating training for our licensed vocations and professions impacts upon the building construction industry.

    • Sam

      Guess how many "A" class (multi-storey, build-anything-you-want) Builder's Licenses have been issued in the ACT? Last count – 1006!!!! You can probably find one in the bottom of your cornflakes box tomorrow morning….

  6. Mark Whitby

    Generally from this article and comments it seems the general consensus that a building diploma, or a building trade or building surveyor type training are better than a drafting service or architect of structural engineer type of training. Could you please explain why an electrician or a landscaper is more qualified than an architect for instance, at carrying out a pre-purchase inspection, because it is not apparent to me.

    Do you even know what the typical total knowledge of an architect or structural engineers is?

    Also your last point is unclear. Did you mean reports carried out for the owner?

    And what about 137B reports for owner builders selling less than 7-year old houses. Are you saying that these are not very well done? They are compulsory as per the Building Act I believe.

    And what about building inspectors as distinct from building consultants? Why would they not be capable?

    It might surprise you that I agree general with the article, but the 40% statistic… where did that come from? Perhaps I need top read more. Surely most such reports are not accessible to any kind of survey.

    • Branko Mladichek

      I think Mark has put up some very good questions. Firstly the claim that 40% of pre purchase inspection reports end up in dispute is not my experience. We have carried out thousands of pre purchase reports in Melbourne with complaint rate of less than 1%, where does 40% come from? It's a complete mystery to me.
      A standard pre purchase report to AS4349.1 or 4349.3 does require finding and reporting on significant defects and timber pests. It does not require advice how to fix issues or the estimate of cost nor does it have to report on a number of items listed in the standards as exclusions and the inspection is limited to safely accessible areas.
      A suitable property inspector could be anyone with the right kind of education and experience but it is for the purchaser to make up their own mind what is best for them. Is architect better than engineer, are they both better than a builder or a tradie or a building surveyor. Ideally it should be a superhuman with knowledge of everything.
      Do you just require basic pre purchase condition report? Property inspector will do.
      Do you also need advice on issues and how to fix?. You will need good building consultant/expert.

  7. Howard Ryan

    Guys,
    It appears that Victorian property inspectors have some issues that need to be addressed.
    It makes no difference who carries out the inspection because event the so called highly qualified can make errors.
    Pre Purchase property inspections are purely based on the education and mitigation factors of the individual inspectors.
    even the best of the best require continuing professional development so they remain updated on the requirements of AS 4349 .1 series of property inspections.
    Some great points are made here and it is our understanding that no Government will introduce a State License for property inspectors, unfortunately it has been tried in NSW and failed which is why 70% of the property inspection industry is uninsured.
    The Australian Standards do not call for Professional Insurance to be mandatory.
    Howard Ryan.