The day before settlement, future owners inspect their new home to make sure there are no major defects or issues in the home.
While pre-settlement inspections aren't mandatory, they are a crucial part of home-buying as they ensure that nothing has changed since you agreed to purchase.
This guide will help you breeze through settlement and track the right things - so you can focus on moving!
What is a pre-settlement inspection and is it essential?
Pre-settlement inspections are different to a pre-purchase house inspection (which you do before you make an offer on a home). A pre-settlement inspection ensures the home is in the same condition as when contracts were exchanged.
These inspections aren't mandatory, but they are strongly recommended so you aren't in for a shock on settlement day when the real estate agent hands you the keys.
These inspections are in the days leading up to settlement, when the new owner attends the property and ensures it is in the same condition as when they offered to purchase and signed the contract of sale.
We particularly recommend a pre-settlement inspection if the current owners live in the property, or if it is an investment property, as it heightens the risk of additional wear and tear.
If you do see a new broken window, hole in the wall or leaking tap - you can ask the vendor to repair this before the inspection. This is done through your conveyancer. If the vendor is undertaking a settlement on their new property, the premises may not be vacant, but you should still ensure you take a thorough look to check for damage.
When should you do a pre-settlement inspection?
These inspections should be undertaken in the days leading up to settlement or key handover. There should be enough time in between to allow for any repairs that may arise.
Each state has different regulations for inspections, so you should check in and know your local laws. For example, South Australia law states that buyers are only entitled to an inspection if their contract of sale states it was subject to one. In Victoria, laws say that buyers are entitled to inspect the property at any reasonable time in the week before settlement.
No matter what state or territory you are in, you will be expected to carry this out at a 'reasonable time' during this period.
You can check in with your conveyancer to ask about your settlement date, so you can contact the agent for an inspection time. Remember, settlement periods vary state by state and by negotiation, so while they are typically 30-60 days, this can differ.
Who can inspect the property?
As the property purchaser, you should undertake the inspection, alongside a witness, such as the real estate agent. This should be organised in advance at a time that suits you and the vendor. It is not legal to demand entry to a home that is not yet yours.
What should be checked during this inspection
Here is a settlement checklist of important things to look out for:
Lights and electronics
- Test light switches and switchboards to ensure they are working; if not it should be identified if this is a bulb issue or a more significant electrical issue. Check exhaust fans and ceiling fans in the house too.
- Check attached electronics like security cameras, fixed speakers or any smart technology.
- It is important to note that anything not attached to the house, like surround sound speakers and TVs, will be removed before settlement.
- Check power points are functioning as inspected
- Check the garage doors and buttons to check they are working
Plumbing and leaks
- Turn on each tap and ensure they operate effectively and water is free flowing.
- Whilst doing this, notice if there are any drainage issues.
- Check under the sink or near the pipes to ensure no leaks.
Water heaters
- Test the hot water system by ensuring the hot taps and shower(s) function.
Air conditioners and heaters
- Check heaters and air conditioning are functioning and have a working remote if required.
Door handles and locks
- Open and close each door to ensure they're in working order. This includes external door locks and window locks.
Appliances
- Appliances such as stoves and dishwashers are typically included in a sale as they are fixed items to the home.
- Others, such as fridges, toasters and coffee machines, are generally taken away by the owner when they move, as they are not fixed items.
- Make sure any of the items you requested to keep are put in the contract before it is signed, as that is the legally binding document, and a real estate agent's word about an extra appliance being left in the house is not legally binding.
- When you complete your pre-settlement inspection, ensure all the agreed appliances are working correctly. If they aren't, it is the vendor's responsibility to fix them before settlement.
Curtains and blinds
- These items are considered fixed, so they form part of the sale. It is still important to note them in the contract.
- Ensure the home's blinds and curtains are working as expected and haven't been damaged since your original inspection.
- Since your initial inspection, you can request that this be fixed before settlement if these are damaged or broken.
Windows and glass
- When you are checking the house at the inspection, make sure that any windows, locks, glass or fly screens haven't been broken, cracked or damaged.
Flooring
- Check there are no new stains on the carpets or damage to the flooring such as cracked tiles and holes or dents in floorboards.
Pool pump and spa filters
- Another 'fixed' item includes pool appliances, they should be in working order if they were previously.
Check for pests
- Check for pests to ensure no new cockroaches or possums in the roof since the pest report.
Smoke alarms
- Ensure the property has adequate smoke detectors and that they're in working order, this should be consistent with your building report.
General cleanliness
- Ensure that all rubbish has been removed
- Check sheds, the backyard, under the house and in cupboards and wardrobes.
- The house should still be clean, tidy and free of additional damage.
Special conditions
- If your conveyancer has negotiated special conditions that were needed to be fixed prior to settlement, then you need to be sure that these are met.
- Requirements could include the removal of items from the home, pest and soil inspection reports, ensuring the property is a vacant premise or the inclusion of specific non-fixed items like washing machines, dishwashers or a dryer.
- If you're unsure about these items or conditions, then it's best to speak to your conveyancer.
What to take to an inspection?
It is best to take along your contract or sale and a camera. This will give you the special conditions and inclusions to refer to and details of your settlement.
What happens if there's a problem?
If you find an issue, don't worry. You should just immediately call your conveyancer and get them to be in contact with the vendor's conveyancer before settlement.
If a problem is the vendor's responsibility, it will need to be fixed before settlement. If the repair required is significant, it could delay settlement.
If the issue can't be fixed in time, the sale price can be reduced to account for the cost of repairs.
What you need to know about insuring your first home.
Wrap up
This is your final inspection before you become a homeowner! These inspections are essential to ensure you are buying a home of the same quality you purchased it at. The condition of the property should be the same as the day you signed your contract. Your inspection should be a time you can note and check anything you addressed in your original inspections, your building inspection and your pest inspection. Remember, if the request wasn't in your contract of sale, the vendor isn't liable to fix it.
If you wanted to, some people opt to take the original building inspector with them to check if any major issues identified were appropriately rectified.
Ensure you note any inclusions that were recorded on your contract of sale and check they are in working order.
Congratulations! This is one of the final stages in your settlement process! It is almost time to pick up your keys.
