The Need According to John Graham, chief executive officer of HouseCheck Property Inspections, to the best of his knowledge, there is no legislation or regulation of the South African home inspection industry, but it is imminent. Home inspection global overview • Graham says this is because the concept is still relatively unknown in South Africa. • He says this is a pity because South African consumers desperately need a regulated and accredited home inspection industry to protect home buyers, especially first-timers. • Graham explains that home inspections globally tend to be buyer driven because buyers have the most to lose. • For example, he says in the US where the home inspection industry was launched in around 1970, it is now estimated that 80 percent of homes are inspected for buyers at the time of sale. • According to Graham, in the US, legislation does not make home inspection mandatory, but rather the legislators in all the different states have chosen to regulate the qualifications and activities of home inspectors. • Home inspection (called a property survey) is also widespread in the UK, Canada and Australasia. South African overview • Graham says previously, estate agents in South Africa were somewhat wary of a perceived threat of negative home inspection reports killing sales. • He says several estate agency bosses such as Andrian Goslett of RE/MAX of Southern Africa, Berry Everett of Chas Everett International property group, Bill Rawson of Rawson Property Group and the Estate Agency Affairs Board (EAAB) have all recently published positive opinions regarding the need for qualified home inspectors to protect home buying consumers.
The Consumer Protection Act
• Graham points out that while the Consumer Protection Act (CPA) specifically nullifies the effect of voetstoots sales, this does not apply to voetstoots sales where the seller is a “one-off” seller. • Most pre-owned houses in SA are sold by “one-off” sellers who are not governed by the CPA and who therefore continue to sell voetstoots. • He says because the CPA offers little practical protection to home buyers and because High Court legal action in SA is beyond the financial means of most home buyers, most home buying consumers remain largely unprotected. • “Banks are potentially very exposed to the CPA through their practice of making loans to uninformed consumers.” • He says the bank valuator’s brief inspection, which is designed to ensure that there is sufficient collateral for the bank in the event of a default, does not provide the same consumer protection as a comprehensive home inspection. • In any event, banks will not divulge the contents of their assessor’s reports to their loan clients.
• HouseCheck recommends that the estate agency industry should, as a matter of honour, adopt a balancing measure and include in their offer to purchase documentation a clause stating that the offer is conditional upon a satisfactory home inspection report. • Such report will have to be arranged for and paid for by the buyer. • If such a clause became standard practice in the estate agency industry, then this would ensure that agents would have to be more diligent and even-handed in counselling buyers about the implications of voetstoots and about the potentially balancing protection offered by a home inspection report, he points out. • “If the buyer then chose to delete the home inspection clause from the offer to purchase documentation, he/she would do so having made an informed decision and could not later complain,” he says. • Furthermore, he notes that estate agents and the EAAB continue to place reliance on a “seller’s declaration”. This is a document whereby the seller declares the known defects in the home. • However, HouseCheck experience shows that this declaration is practically useless as effective buyer protection because, even if all sellers were diligent in their “honest declaration”, very few sellers have the knowledge or ability to assess, for instance, the roof covering, roof weatherproofing, roof structure, or the geyser installation, he says. • Graham points out that a trained home inspector will document and evaluate all observed defects from the roof to the boundary walls and everything in between. • He notes that illegal alterations and additions to SA houses are an increasing problem. Home defects and dodgy sellers South African home buyers are urged to conduct a home inspection before signing the property sale agreement, according to Eric Bell of Inspect-A-Home. Bell says historically, sellers will not disclose all defects and therefore it is much better for the buyer to have the inspection done prior to any sales agreement in order to have a fair assessment of the property to avoid any costly oversights. Most houses inspected do have defects and if costly to repair, a reduction in the purchase price is only fair. Property24 recently published an article on why it is important to hire a property inspector. In the article, Bell explained how a couple ended up paying R150 000 over and above the purchase price of their new home. What they didn’t know when they signed the sales agreement was that they would need to replace the roof sheeting, rotten door frames, and a leaking geyser before they moved in. They signed a disclosure document stating that the house was in good working order, so they couldn’t return to the seller or estate agent with their complaints or bills, he said at the time.