First Home Buyers Lemon Alert

Archicentre, the building advisory service of the Australian Institute of Architects has issued a national Lemon Buster alert.

First home buyers rushing to sign up to gain the Federal and State Government Grants could face a triple financial whammy if they buy a 'lemon'. These are over priced homes, expensive repairs and rising interest rates in the longer term.

General Manager of Archicentre David Hallett said, buying a home is a complex exercise and if people purchased a lemon with major faults or a property they could not afford, it could lead to a major personal and financial crisis.

"The extension of the Federal and State Government housing grants to stimulate the housing sector has placed a sense of urgency into home purchasing for inexperienced first home buyers."

Mr Hallett said that it is important people purchasing existing homes were thorough in their preparation for purchase to ensure the advantage of the first home buyer grants, which can total up to $26,000, is not lost in repairs to expensive faults.

"Many buyers phone Archicentre after they have already signed the contract of sale or find problems once they have moved in."

Archicentre has found that at least one in three homes sold have a range of problems that could add thousands of dollars to the cost of a property, especially if the faults discovered involved structural, plumbing, electrical, termite or illegal building.

Archicentre 2009 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%

Archicentre carries out over 20,000 pre-purchase inspections and design reports for home buyers annually on property valued at $7 billion.

"In the current climate where many vendors who are facing mortgage stress decide to sell, the lack of funds for maintenance or repairs can increase the risk of 'Lemon properties' coming onto the market.

Archicentre inspectors say that the new DIY products that fill gaps and cracks are perfect weapons of mass deception which can help dress up Lemon properties.

"Typical warning signs for 'Lemons' include the use of gap filling products, new wall panelling, strategically placed furniture, pot plants or rugs and newly painted surfaces."

Mr Hallett said that often the decision not to carry out an inspection can make a major financial and social impact on buyers who in some cases run into serious debt problems with unbudgeted repairs or maintenance being added to the mortgage compounding the affordability problem with a $30,000 repair cost turning into $50,000 over the life of a normal loan.

The following list of Lemon Buster cover ups and estimated costs to repair are based on the findings of Archicentre architects conducting pre-purchase housing inspections across Australia and the Archicentre Cost Guide.

Archicentre Top Ten Cover Ups

1. Illegal building. Up to $100,000.

2. Cracking up to $50,000. Average $3,000. Internal walls patched and painted, or new wall panelling installed concealing the cracks, external walls concealed behind plants or trellis.

3. Damp up to $50,000 and $5,000 average. Walls painted or furniture placed against damaged walls.

4. Termites, borers, and timber rot up to $20,000. Average $5,000. Floor damage patched and concealed under carpets.

5. Roof problems up to $20,000. Rusty metal roofs painted, tile roofs patched with lead. Damaged roof framing propped up in roof space.

6. Rotten weatherboards and windows up to $10,000. Rot patched with filler or covered with tin and painted.

7. Rotten sub-floor or stumps $8,000 average. Floors temporarily propped to prevent bouncing.

8. Faulty or illegal wiring $6,000 average to repair.

9. Faulty or illegal plumbing $6,000 average to repair.

10. Guttering and downpipes $3,000 average. Rusty gutters patched and painted.

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 General 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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