Home Buyers Warned on Million Dollar LEMONS

Only about one in ten people have a pre-purchase property inspection.

Million dollar homes, which have become more common in Australia as property prices skyrocket, can also have faults, Archicentre, the building advisory service of the Australian Institute of Architects said today.

An Archicentre inspector checking the condition of the roof and guttering on a property for sale.

Archicentre, the largest supplier of pre-purchase property inspections and design reports said nine out of ten people take the LEMON gamble and do not have a pre-purchase property inspection on the home they buy, which is often their largest financial commitment.

David Hallett, Victorian State Manager of Archicentre said with property prices and interest rates on the rise, and power and water prices expected to double in the next two to three years, buying a Million Dollar LEMON has become financially riskier than ever.

"In reality people spend more time and money checking out a $10,000 car to be roadworthy than an average home costing between $500,000 to over a million dollars."

Mr Hallett said that million dollar homes used to be a rarity, however, in today's property market they are common.

Archicentre pre-purchase property inspection report statistics show that over 35% of over 120,000 homes inspected over the past decade have defects, many of which are expensive to fix.

"What this means is when people purchase a home and are faced with hefty unplanned repair or maintenance bills, they are dramatically at risk of over-capitalising and if not well planned and managed the purchase of the home ultimately can turn into a loss.

"People have usually borrowed to the limit and if expensive repairs are needed this is normally added to the loan increasing the long term debt and limiting financial return."

Mr. Hallett said that at the very minimum, prospective buyers should undertake their own comprehensive inspection and could download a free do it yourself inspection checklist from the Archicentre website at http://www.archicentre.com.au/survival_kit/diy_checklist2008.pdf

"At least with a written property report you can assess what the real costs are and whether you are in any danger of being faced with an excessive repair or renovation bill whilst battling to pay your mortgage.

"It is too late once you have signed on the dotted line and it is important to have the inspection done before signing the contract, or in today's buyer market sign the contract subject to the inspection reports outcome.

Archicentre's national pre-purchase home inspection statistics reveals all homes inspected had a range of faults including illegal building, rising damp, roof faults, faulty electrical wiring and cracking.

Archicentre 2010 statistics compiled from pre-purchase home inspections in each State

	Damp	Framing	Illegal Building	Pier / Stump Faults	Timber Rot	Cracking	Electrical	Roofing	Water Supply
NSW	47%	24%	29%	18%	36%	40%	31%	37%	9%
VIC	32%	20%	30%	31%	45%	43%	33%	53%	15%
QLD	32%	16%	22%	22%	33%	20%	21%	31%	8%
SA	46%	15%	32%	4%	36%	48%	31%	37%	8%
WA	30%	15%	21%	11%	20%	36%	19%	30%	12%
TAS	25%	9%	34%	13%	22%	44%	25%	40%	10%

Mr Hallett said that in many cases where funds are not available people just put up with living with the faults. Where the faults are structural or life threatening and must be fixed the new home owner is faced with borrowing more money which can lead to over capitalisation of the property.

www.archicentre.com.au

Media Enquiries:
David Hallett Victorian State Manager Archicentre (03) 9819 4577 Mobile: 0439 439 115
Ron Smith Corporate Media Communications (03) 9818 5700 Mobile: 0417 329 201

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