There’s no shortage of horror stories about people who have bought a property that looked fine on the outside but which, in fact, hid serious defects, in other words a lemon. 

Major problems and faults can cost property buyers many thousands of dollars to fix (that’s if they’re fixable at all), not to mention the emotional strain of watching your ”successful” purchase turn into a disaster.

So how can you avoid buying a lemon? The rule, as always, is to buy your home using your head, not your heart.

This means ensuring you thoroughly and objectively assess properties for signs not only of existing problems but also problems that may occur down the track.

When inspecting a property, you should do two types of checks. The first is your own initial appraisal and the second – if you’re serious about the property – is to bring in the experts, who can ensure that the home is free from defects.

Inspecting a property, yourself

When inspecting a property, don’t just look at its upsides but be on the hunt for potential downsides as well. This will not only save you from buying a disaster waiting to happen but can also save you the cost of getting a professional inspection if you decide the problems are severe enough to know the property is not for you.

A good way to go about your inspection is to divide the property into three areas – the inside, the outside and the surrounding land and structures. The following is a list of things to look for; however, you should also add anything else you feel is important to review.

Insider’s tip: If you have friends or family who have recently bought a property or have expertise in this area, ask them to come with you. They may be able to give you some pointers on what to look for and, with less emotional investment in the result, they might be more objective.

Inside the dwelling:

Water pressure: Turn on the taps in the kitchen, bathroom and laundry. Check the pressure and colour of the water and how well it drains.

Damp: Check for stains, water marks and paint damage. Sellers will sometimes paint over damp to hide it, so use your sense of smell.

Cracks in the walls, or doors that stick: These can be signs of subsidence or movement. If the damage is severe, it may indicate a big problem that would cost thousands of dollars to repair.

Sticking windows: If windows don’t open and close properly, the frames may have warped (if they’re wood) or rusted (if they’re metal). New paint jobs can hide both. You can tell if wood is going to rot by pressing it with your finger – if it’s soft, there’s a problem.

Mould: If there’s mould in the bathroom, it’s usually a sign that there’s a ventilation problem that needs to be fixed. In addition, you’ll need to re-grout and repaint.

New paint: Paint is often used to hide faults. Run your hands over the walls and look at them from different angles to see if you can find any problems.

Bathroom: Check for damaged enamel and broken surfaces. Loose grout and cracked or lifting tiles can be signs of water damage. Check the plumbing and pipes for leaks.

Hot-water service: Ask about the age of the unit and how well it performs. Check for leaks and rust and ask when it was last serviced.

Insulation: If you can, look through the manhole into the roof to check the age and condition of the insulation and ask whether the walls are insulated.

Pests: Look for signs of pest trouble, such as rat or mousetraps or poisons. Sagging floors, springy floors and steps, as well as hollow-sounding beams, can all be signs of termite damage. If you’re serious about buying a property, you should think about getting a professional pest inspection.

Electrical wiring: Old-fashioned switches and sockets can be signs of old wiring that could need replacing.

Heating and cooling systems: Inquire about the age of the units, their service records and whether they are running well.

Floor coverings: Check the carpets for wear and tear and decide whether they’ll need replacing. Lift any rugs to make sure they’re not covering any damage.

Fly screens: Make sure fly screens are fitted where necessary and aren’t damaged. They can be surprisingly expensive to replace.

Kitchen and laundry: Check the age and quality of the benchtops and cupboards and make sure there’s room to accommodate all your appliances.

Decor: Changing the wallpaper or repainting is simple to do but can be expensive, especially if you hire someone to do it. Consider how much work needs to be done.

Renovations: If you’re planning to renovate, it pays to go a step further and check the ease with which tiles can be lifted and carpets removed. If you can, and it’s safe to do so, get under the house to see if floorboards can be polished or whether they need replacing. Check the quality of the fixtures and fittings to see what needs to be updated or restored. Think about how much work the kitchen and bathrooms will need.

Room layout: Make sure there are the right number of rooms in the right places, as well as sufficient storage to meet your needs.

Power points: Check that there are enough points in the right places and think about whether you’ll need to add more.

Furnishings: If you already have furniture, think about how it will fit with the property, whether you’ll need to replace it and how much additional furniture you’ll need.

Outside the dwelling

Orientation: Check which direction the house faces and whether the living areas will be too hot or cold.

Plumbing: Check the external pipes for leaks and rust.

Fuse box: Make sure it’s modern and meets safety requirements. If you have doubts, get an electrician to check the box and the house wiring before you buy.

Guttering: Look for leaks, rust, warps, holes and signs that the gutters overflow. Think about whether the leaves from nearby trees will cause problems. Check whether the downpipes and drainage are in order and fixed well to the storm water drain.

Asbestos: Ask whether and where asbestos has been used. Most often, it’s found in walls, roofing and fencing. It is always best to have asbestos assessed and removed professionally.

Roof: Check for missing, cracked or sliding tiles. A sagging or undulating roof can be a sign of underlying structural issues.

General appearance: Check the overall state of the building and look for damaged windows, cracks in the brickwork or cement work and whether it needs a new coat of paint.

Extensions: Check the quality of the workmanship on any extensions and ask to see the council approvals.

Termites: Ask whether the area is prone to termites or other insects and double-check what you are told with the local council. Check for termite damage wherever any wood touches the ground, such as alongside walls, pergolas and decking.

Surrounding land and structures

Trees: Trees nearing the end of their lives can pose a danger and be quite expensive to remove. Check the age, condition and type of trees in the garden and check whether any trees – including those owned by the neighbours – have the potential to damage your property by falling or dropping branches.

Garden: Check the general condition of the garden and consider how much work will be required to maintain or improve what’s there. Check whether there are sufficient taps for watering and whether the garden’s size and shape will meet your needs.

Privacy: If the property is overlooked by neighbouring houses, it can affect your enjoyment of your outside spaces. If the neighbours can see in, think about whether screens, fences or high-growing plants or trees might fix the problem.

Fencing: Check the fences and gates for damage. If repairs are needed, find out what your share of the cost will be.

External structures: Check carports, sheds, pergolas and decking to make sure they are stable and in good condition.

Pools and spas: Look for cracks or bulges in pool bottoms and sides and check lighting, filtration and heating systems. Check for evidence of leaks or repairs and the condition of the surrounding paving. Ask for evidence of any maintenance and servicing. Pool repairs can be expensive, so bring in an expert if you have any concerns.

Drainage: Wet or muddy patches in the garden can indicate poor drainage. Check for water damage on both the main property and any surrounding structures. These checks are imperative if the block of land slopes or is at the base of a hill.

Insider’s tip: It is often difficult to get approval from the local council to remove trees, something that can affect your landscaping and renovation plans.

After your inspection, reflect for a moment on what you’ve discovered. Document your findings and estimate how much any repairs will cost. Weigh up whether the costs outweigh the benefits of buying the property.

If you still want to proceed with the purchase, it’s time to bring in the experts.

An edited extract from The Great Australian Dream: A Guide to Buying Your First Home, by Peter Boehm

7^th February 2017

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

Conditions in the global economy have improved over recent months. Business and consumer confidence have both picked up. Above-trend growth is expected in a number of advanced economies, although uncertainties remain. In China, growth was stronger over the second half of 2016, supported by higher spending on infrastructure and property construction. This composition of growth and the rapid increase in borrowing mean that the medium-term risks to Chinese growth remain. The improvement in the global economy has contributed to higher commodity prices, which are providing a boost to Australia’s national income.

Headline inflation rates have moved higher in most countries, partly reflecting the higher commodity prices. Long-term bond yields have also moved higher, although in a historical context they remain low. Interest rates have increased in the United States and there is no longer an expectation of further monetary easing in other major economies. Financial markets have been functioning effectively and stock markets have mostly risen.

In Australia, the economy is continuing its transition following the end of the mining investment boom. GDP was weaker than expected in the September quarter, largely reflecting temporary factors. A return to reasonable growth is expected in the December quarter.

The Bank’s central scenario remains for economic growth to be around 3 per cent over the next couple of years. Growth will be boosted by further increases in resource exports and by the period of declining mining investment coming to an end. Consumption growth is expected to pick up from recent outcomes, but to remain moderate. Some further pick-up in non-mining business investment is also expected.

The outlook continues to be supported by the low level of interest rates. Financial institutions remain in a position to lend. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.

Labour market indicators continue to be mixed and there is considerable variation in employment outcomes across the country. The unemployment rate has moved a little higher recently, but growth in full-time employment turned positive late in 2016. The forward-looking indicators point to continued expansion in employment over the period ahead.

Inflation remains quite low. The December quarter outcome was as expected, with both headline and underlying inflation of around 1½ per cent. The Bank’s inflation forecasts are largely unchanged. The continuing subdued growth in labour costs means that inflation is expected to remain low for some time. Headline inflation is expected to pick up over the course of 2017 to be above 2 per cent, with the rise in underlying inflation expected to be a bit more gradual.

Conditions in the housing market vary considerably around the country. In some markets, conditions have strengthened further and prices are rising briskly. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for a couple of decades. Borrowing for housing has picked up a little, with stronger demand by investors. With leverage increasing, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments.

Taking account of the available information, and having eased monetary policy in 2016, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

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