Need to know how a final inspection works and what to look for?
If you are buying a property you need to know it is in the same condition as when you signed the contract, and there are no nasty surprises. Otherwise you could be forced to pay for repairs out of your own pocket after settlement happens.
With our handy final inspection checklist you can make sure you tick all the right boxes and don’t miss or overlook anything in this final step.
Let’s start by understanding the reason for having a pre-settlement inspection.
A final inspection or pre-settlement inspection is your last chance to view the condition of the property you are buying. It is also an essential step in making sure you are getting everything as set out in the contract of sale.
The main reason you carry out this inspection is that settlement is anywhere from 30 to 90 days, which is ample time for damage to occur or for something to break or stop working. This is especially true for a property that is occupied until just before settlement occurs.
It is also important to clarify that the final inspection should not be confused with your initial pre-contract inspection of the property. Though the same conditions apply for that inspection - if anything isn’t working or in need of repair can be detailed for repair in the contract of sale.
Tip: A final inspection is not a compulsory step in the purchase process, but it is highly recommended as after settlement it is too late to remedy anything you discover.
There are also rules around who can conduct a final inspection and when it can take place.
A final inspection or pre-settlement inspection typically takes place in the week before settlement, though this does vary slightly depending on the state you are in. No matter where you live, you are generally expected to conduct the inspection at a ‘reasonable’ time that suits the seller.
Tip: Inspect the property in good time before settlement so the seller has time to carry out any repairs or remove items.
You need to inspect the property with a witness, typically your real estate agent, and if it is a private sale with the seller. The benefit of having the seller there is that they can show you everything how things work and the location of key items - like your electrical switchboard and meters.
Let’s now detail everything you need to check in the inspection.
Not sure what to inspect? Use our handy house settlement checklist to make sure you cover everything that needs to be checked.
The final inspection is the time to confirm all the items the seller agreed to leave (inclusions) and agreed to remove (exclusions) have been taken care of - as agreed and detailed in the contract of sale. Fixtures, like lighting, often get removed by the seller when they move out - but these items need to be detailed as an exclusion in the contract, otherwise you can ask for them to be replaced.
Carefully inspect the entire house, inside and out, for any signs of damage that have occurred since you signed the contract. Common problems include damage hidden by existing furniture or damage caused when the seller moves out.
The property should be clean and tidy as you approach settlement, with the garden clear of rubbish and the interior free of furniture or any other personal belongings.
You also need to check to see everything still works, particularly electrical outlets and lighting as well as all plumbing, water heaters, air conditioners and heaters. If the property has a pool you need to make sure the pump and filters work properly. You should also take the opportunity to check the functioning of all doors, windows and any awnings.
Finding problems at the pre-settlement inspection stage is not uncommon, so you need to know how to deal with this.
If you find a problem with the property at the final inspection phase notify your real estate agent and/or legal representative who will liaise with the seller’s solicitor. They will try to find a solution that all parties are satisfied with.
If the repairs are significant or the seller is unwilling or unable to fix them in the timeframe your solicitor may be able to negotiate a reduction in the sale price. It's worth repeating that if you find the damage after settlement you will be liable for the cost of repairs, so the final inspection needs to be as thorough and detailed as possible.
Armed with this checklist you should know what to look for when you conduct a final inspection.
Have any questions about final inspections or the purchase process? We’re here to help, and our local team are available to chat at a time that suits your schedule.