Ep 45. Pre Settlement Insights for Homebuyers
In this episode, Michelle explores pre settlement inspections and their significance in the property buying process.
Here’s what you’ll learn from today’s episode:
Michelle explains the reasons behind the timing of the inspection in the buying process and the potential issues that can arise if done on the day of settlement.
How buyers typically have the right to only one additional inspection between exchange and settlement and some advice around this.
The importance of checking the inclusions listed on the front page of the contract during the pre settlement inspection.
Recommendations of what to do when initially deciding to buy a property which can be essential if discrepancies or issues arise later.
Speakers in today’s episode:
Michelle May - Michelle May Buyers Agents
Follow Us:
Enjoy the show?
Don’t miss an episode, follow via iTunes. If you like it, please leave a review!
Or, find us on the podcast app of your choice, such as Spotify.
This podcast has been produced and edited by Snappystreet Creative
Please note that any views or opinions presented in this podcast are solely those of the speakers, and do not necessarily represent those of any business. These views and opinions are general in nature, and do not take account of your personal objectives, financial situation and needs. Please consider whether it applies in your circumstances and seek professional advice wherever appropriate.
Listen to the Episode Now
VIEW TRANSCRIPT
Hi, and welcome to another episode of the Buy Your Side podcast, the property podcast to help you make smarter property-buying decisions. My name is Michelle, and I am the principal of Michelle May Buyers Agents here in Sydney. And today I want to talk about pre-settlement inspections. What, why, how, what happens?
Okay, so pre-settlement inspections are the inspections that you do and carry out before the settlement of the property. It is your opportunity to make sure that the property is in the same state as when you made your offer or when you went to auction. It is your chance to make sure that the only things that are left in the property are the inclusions are left in the property that are ticked on the front page of the contract, and that no rubbish has been left behind, either accidentally or on purpose.
Now, my biggest tip for you would be to do this pre-settlement inspection a couple of days before your settlement is due to occur, for a number of reasons, because firstly, if you do it on the day of settlement and things are not as they should be, it doesn't give the vendor the opportunity to fix it and you may well then need to delay settlement, which nobody wants to do because you've probably already lined up your moving van and, it's all very stressful.
And it may not even be possible if the process has already been put into PEXA, which is the system that makes the settlements happen on the line, so to speak. So what you want to do is to do it a couple of days before, but the biggest part here is that you want to make sure that the property is actually empty so that the vendor has vacated. Because you want to see it empty to make sure that, like I said, nothing has been left behind, you know, they haven't ripped out the kitchen, but also that there's not a ton of rubbish left in the storage cage or, or in the attic, for example, or in the shed, that's a popular place to leave rubbish behind as well.
So we want to make sure we want to be able to see the wood through the trees. And so you can't really do that with the vendor's stuff still in situ. So do it a couple of days before, because if you then find that something is not the way it should be, you can then give your solicitor a heads up and say, Hey, Janet, I've just done my pre settlement inspection and actually, you know, there's a ton of stuff left in the attic that I really want removed. And so they can then decide to contact the vendor solicitor, give them a heads up and obviously the agent will know as well that Mr. and Mrs. Vendor need to fix that up before settlement occurs. If it is a big issue, like say they have ripped up the kitchen, not that I've ever come across that, but say that that happens, God forbid, then the vendor, your solicitor may also decide to withhold funds to ensure that you've got some backup to have things fixed or rectified by a professional. So, that's actually an option that your solicitor as the buyer has, and so therefore you need a bit of time, you know, to give them a heads up that this is the case.
So it's really important to start looking at locking in your pre settlement about a week or two before settlement happens. So contact the sales agent and say, Hey, we'd like to do the pre settlement, can we do it when, but firstly understand when the vendor is actually thinking of moving out, when will that all happen? So it's certainly not an ideal situation if they're still moving out on the day of, but yeah, try and work that out. Now, did you know that actually once you've exchanged on a property, no matter how long the settlement is, you actually only have the right to one inspection between exchange and settlement.
So only one extra inspection. So I, my advice would be to, to make sure you save that for your pre settlement because you really need that visual inspection to report back to your solicitor. So if you want to get the floor sanded or you want to get a painting quote or anything like that, or, you know, anything prior to settlement, that would be regarded as an extra inspection. And you would need to just make sure that the sales agent understands the difference and that you still want to reserve the right to do a pre settlement inspection. So you can't just expect that just because you've signed the contract and paid a deposit that you now have free access willy nilly during that settlement period.So it's really important to reserve that pre settlement inspection.
When you are at your inspection, it's always handy to have a copy of that front page of the contract, you know, on your phone and look at the inclusions. I would say that it is quite common for vendors to leave behind paint. Strictly speaking, they have to remove everything that's not on the front page of the contract marked as an inclusion, but a lot of people will leave paint tins just so that you can match them down the track if you wanted to, but you can actually stipulate that everything is removed. So that also would include that 50 year old pot plant that is so heavy that nobody really wants to touch it.
If it's not in the ground and above ground and loose as such, you can actually ask for that to be removed. And again, that's why you, you want a bit of time so that, you know, the vendors actually have a chance to get it removed. So quite often the agent, in my experience, will try and persuade you, shall I say, to leave things as they were. Oh, don't you want this or that? You're fully within your rights to request for that to be removed. And again, I think that the smartest way to do that is directly, say to the agent, voice it whilst you're there, but also give your solicitor the heads up so they can contact the vendor solicitor to get that all removed in time.
And then what I would ask for is either, once the vendors have done that, either ask for a second inspection or ask for photographic or video proof that it has actually been done. So the agent can show you that it's actually all been removed. Now, and in quite a few cases when the vendors are not in the situation to do so that the agent will actually organise for it to be removed so that settlement can still happen when it should. So that is always the option as well.
Now, the final piece of advice when it comes to pre settlement inspections, I think would be once you have decided that this is a property for you, either at an inspection or, you know, when you're at the auction and you've made the winning bid, take a video. Take a video and go through the property. So you've actually got evidence of the way things were at the time that you exchanged or, you know, at the time of the campaign. So, you know, what I would do is just check whether the gas is switching on, on the stove, you know, is the fan in the bathroom working, you know, is the air con turning on and off, all that kind of stuff.
So just be mindful of that, that you've got some kind of evidence, you know, working backwards, if things are remarkably different on the pre settlement inspection, it could even be damaged from moving out if there's all of a sudden big marks on the wall, you could actually request for that to be rectified or a hole where the brackets for the TV unit used to be, for example.
The last thing I want to mention is the inclusions. On the front page, they don't actually have to be in working order, so they just have to be the same as they were before. So be mindful of that, and that's why it's really important to have video evidence, so that you can actually go, well, hang on, it's not as it was before, and then, you know, you can negotiate your way through that.
So yeah, that would be my last tip on pre settlement inspections and just exchanging on properties in general. Just, it's wonderful that you can just take your phone in and record it all.
I hope that's been helpful. Just a short one today. If you have any questions, always drop me a line at hello@buyyourside.com.au. And also for my sins, I am now on TikTok with more advice on the property market and how to navigate the buyer side of things when trying to buy a property.
So check me out it's @buyyourside_ Give me a like, give me a follow, and I look forward to hearing from you soon. Thank you.