FOMO beats ‘buyer beware’ for purchasers

NSW Building Commissioner David Chandler’s recent comment that apartment buyers should “beware” of the potential for their new block falling around their ears – apart from sounding suspiciously like victim-blaming – has a few holes in it.

For a start, who do you turn to have the building checked? According to this recent story in the Sydney Morning Herald, the building inspector may have no better knowledge or, indeed, qualifications than you to be able to tell how likely the building is to fall over.

At the lowest level, says the story, people with neither relevant building experience, qualifications nor insurance, are claiming to be inspectors.

Australian Standards only demand that anyone doing pre-purchase residential building inspections needs to be “competent” and have “experience”.

However, there are no regulations to enforce this. Building and pest inspectors aren’t  required to be licensed builders or to have professional indemnity insurance.

This could all change with the current reviews of building certification regulations but in the meantime, when it comes to buyer beware, your caution should probably start with the person you hire to inspect your proposed purchase.

This is just one of many flaws in the caveat emptor, approach, according to a prominent planning lawyer who spoke to Flat Chat on the condition of anonymity. And it seems advice we often give could be … well … short-sighted.

“You tell people to only deal with recognised developers who are more likely to be around when problems start to show,’ he said.

“But if you take all the small developers out of the equation, in the hope of avoiding the dodgy ones, that will leave a huge undersupply of apartments that the big developers simply won’t be able to fill.”

Then there’s the question of who to hire to do all the searches required to make sure the building is going to be OK.

“I’ve been in this industry for 30 years and I wouldn’t know exactly who to ask, especially for specialised inspections,” he said. “Sure, you can pay the top firms top dollar for an inspection … but what if you miss out on that property … and the next … and the next.

“Pretty soon a chunk of your deposit has been eaten up by the cost of inspection reports.  No wonder people just end up going with the report provided by the real estate agent or the vendor.”

Then there’s FOMO – fear of missing out.

“When people find the perfect apartment in the perfect location at the right price, the last thing they want is to miss out by being over-cautious.

“When another buyer is hovering around – even though they may be a figment of the real estate agent’s imagination – caution is thrown to the wind.”

And what if that person is real?  Why aren’t they also being cautious?

“Despite all the negative publicity around failed apartments, there are still people out there who can’t believe that there aren’t laws and regulations that protect consumers when they make the biggest purchases of their lives.

“And there are a lot of people for whom English is not their first language, who come from countries where regulations are even slacker than ours but for whom apartment living has always been an obvious choice.

“Where we might be looking at potential problems, they may only see potential,” he said. “Increasingly, choice is a luxury only a few people can afford.”