The ultimate pre-settlement inspection checklist

When buying a home, there are procedures that protect both parties involved at varying stages of the process. Before you settle contracts, a pre-settlement inspection is a must.

The goal of these inspections is to ensure the property condition is the same as it was when you exchanged contracts. You may have noticed a lot of repair issues on your initial walkthrough, but they were snagged for repair, and you were assured they would be complete before the sale. This is your chance to ensure promises are kept.

At DiJones, our team of experienced real estate agents have seen a lot of inspection problems over the years. Unfortunately, not everyone takes these inspections seriously, and they miss their chance to renegotiate the sale price or have those repairs dealt with before they settle.

With that in mind, let’s walk through the importance of the pre-settlement inspection and why we strongly recommend having a control checklist to keep you on track.

What is a pre-settlement inspection?

Prepurchase inspections are an essential part of the home-buying process. It confirms that the property is in the same condition as it was when you last viewed it before the exchange of contracts. It allows you to note damaged or missing items, incomplete repairs, or defects.

A lot of these issues create headaches for buyers after property settlement, so taking care to inspect the property beforehand will help you protect your investment.

Related: What is settlement in real estate?

What to check for a pre-settlement inspection

Once your inspection is arranged, you can create a pre-settlement inspection checklist to keep you on track. An inspection ensures your investment is safe, and a checklist will ensure you don't miss anything.

Exterior

You can begin the inspection on the exterior of the home by walking the area fully. Be sure to check:

• Structural integrity: Look for signs of structural damage, including cracks, leaning walls, doors, windows and glass that don't open and close properly.
• Roof: You can't exactly climb the house for roof access, but you can look for missing shingles or any visible damage and look for leaks when you reach the interior.
• Gutters and downspouts: Gutters and downspouts should be clean and obstruction-free.
• Windows and doors: While improperly closing windows and doors could be a sign of structural issues, it's also important to check to ensure all windows are properly sealed and secured with window locks. Likewise, check door handles and locks. Ensure you have keys to door locks if they are present.
• Fencing: Check fencing for gaps, damage, or sharp edges.
• Outdoor fixtures: Don't forget about outdoor fixtures. Check the condition of the sprinkler system, faucets, lights, and any other external fixtures.
• Landscaping: If you have agreed upon specific plants or landscaping fixtures, ensure they are present, in good condition, and meet any special conditions outlined in the contract.

Interior

With the exterior complete, you can make your way indoors for further inspection, looking for uncommon and common issues. Such as:

• Electrical systems: You don't need to be an electrician to test power points, appliances, light fittings, and light switches to ensure everything is in working order.
• Plumbing: If there's a tap, you need to turn it on to ensure it runs and ensure it drains freely. Check showers, toilets, sinks, faucets, and in addition to proper function, make sure there are no leaks. Be aware that issues with the water pressure could indicate a leak.
• Heating and cooling systems: Ensure the heater and air conditioner are fully operational. Be sure to check the water heater.
• Flooring: Inspect the flooring for stains, unevenness, and damage. Uneven floors could be a sign of a much bigger problem.
• Walls and ceilings: Cracks could indicate a structural problem, so be on the lookout for cracks in the walls and ceilings. You should also look for signs of mould and water stains.
• Kitchen appliances: Make sure to test any remaining kitchen appliances, including the microwave, refrigerator, dishwasher, stove, exhaust fans, and oven.
• Laundry appliances: If the washing machines and dryers are included in the deal, check to ensure proper operation.
• Bathroom fixtures: Check the condition of all bathroom fixtures, including showers and tubs, sinks, toilets, and any other immovable fixtures.
• Security systems: If there are any security systems in place, test the access controls, alarms, and cameras.
• Smoke detectors: Test smoke alarms and carbon monoxide detectors to ensure they are functioning properly.

Specific Items

With the majority of the house inspection complete, you can focus on more specific areas for issues. Consider looking at:

• Window dressings: If blinds and curtains are included in the agreement, ensure they are functional and in good condition.
• Pool and spa: They're big selling points, so it's important that you ensure they have the necessary safety features and the equipment is fully functional. Ensure there are no leaks.
• Garage: Check the garage door function and electrical outlets, and repeat your structural integrity checks.
• Storage areas: Inspect storage areas closely, ensuring the condition of shelves, cabinets, and closets. In addition to obvious damage, be aware of musty smells that could indicate an issue with mould or dampness.
• Outdoor living spaces: You must check outdoor living spaces for safety and stability, including balconies, decks, and patios.

Additional Considerations

While the main inspection may be complete, there are additional considerations to factor in and double-check. Remember to look for:

• Pest control: Check for pests on every leg of your pre-settlement inspection, whether it's termites, ants, or rodents. If you have concerns, you can arrange for a pest inspection. Pest inspections are commonly carried out during the initial building inspection.
• Noise pollution: Pay attention to the noise levels from neighbouring industrial areas, transport, roads, and airports.
• Neighbourhood amenities: Is the neighbourhood well located for amenities? Are they close enough to shops, parks, schools, and public transport links?
• Property boundaries: Ensure the property lines and easements are accurately outlined.
• Contract compliance: This is your last opportunity to ensure that everything included in the purchase agreement is present and in working condition.

Related: How much does a building inspection report cost?

When should you schedule a pre-settlement inspection?

The most appropriate time to hold the inspection is in the week before the settlement date. This timing provides reasonable time for renegotiations or for the seller to address the necessary repairs. Sit down with your real estate agent and arrange a day and time that works for everyone.

Who should inspect the property?

While you can do it yourself, it's always wise to take your real estate agent with you. With their experience, they may pick up on certain things you wouldn't naturally notice. If the property is occupied, your estate agent will need to loop the sellers into the process to coordinate a suitable time for everyone.

What should you do if you find any issues?

If you pick up issues on the final inspections, you have two options for handling them.

Reporting problems: The first step, of course, is to give feedback on the problems and issues to your real estate agent, conveyancer or solicitor with the handover checklist. They will likely offer you advice on the best course of action. However, it comes down to negotiating for one of two things.

Negotiation: You can negotiate with the vendor, allowing them to handle the repairs, either covering the cost of those repairs or having them dealt with before settlement. Or, you can renegotiate the purchase price of the property.

Related: Pre-sale building and pest inspections - how they save you time and money

Tips for a successful inspection

You don't necessarily need to do homework before a successful inspection, but you should prepare for the walkthrough.

• Preparation: Always be prepared. You should gather all of the relevant documents before you carry out an inspection, including any previous inspection reports you have, as well as the contract.

• Documentation: While it’s important to have your relevant documents ready beforehand, you need to be prepared to take documentation as well. You can either take videos or photos to record any issues you uncover during the course of the inspection.

• Questions: Don't be afraid to ask questions, whether you direct them to your real estate agent to follow up with the vendor or speak to the vendor directly. If you have a concern or you're unsure about something, ask the question.

Frequently asked questions

Can I ask for repairs after settlement?

No. You need to ask for repairs after the pre-settlement inspection is carried out. If you wait until after settlement, it's too late. The seller has no reason to agree to anything. Use the pre-settlement period to address any issues, whether it's necessary repairs or renegotiating the purchase price of the property.

Can I cancel the purchase agreement if I find major issues during the inspection?

That all depends on the terms and conditions within the contract you signed. Some agreements allow for renegotiations if issues are found during pre-settlement inspection.

However, some agreements do have special conditions for walking away if significant issues are discovered on the final inspection pre-settlement. Your agreement should detail what is considered a major issue.

What questions should I ask the home inspector?

You want to know if there are any issues with the critical home systems like plumbing and electrical, as well as if there are any structural issues.

There may be issues for you to address immediately after settlement that you want more information about. But the focus here is on ensuring the property is in the same state it was when you first viewed it. You want to avoid any nasty surprises.

Can I negotiate the purchase price based on the inspection findings?

Yes. The purpose of carrying out an inspection pre-settlement is to ensure everything is as expected. If there are issues with the property, you can renegotiate the purchase price.

Or, the vendor can cover the cost or have them fixed before settlement. Your real estate agent or solicitor should be able to guide you through this process to determine which outcome is the best to aim for during negotiations.

Summing up

Don't underestimate the importance of the pre-settlement inspection. You have spent a lot of time, energy, and money finding the perfect residential property, and you should ensure everything is as expected before you complete the final handover. It's your last chance to catch changes, problems, or issues before settlement is complete.

How DiJones can help

Do you have any questions about an upcoming pre-settlement property inspection? Whether it's a residential or a commercial property, feel free to get in touch to discuss your situation. We're always happy to answer questions and help shed light on these complicated processes. You can also check out our buying and selling guides for more information about the selling process.