Nicola Kelland - Information packs

A recent Fair Go programme highlighted the plight of buyers attending numerous auctions trying to purchase a home only to be well outbid on the day. The programme focused on the cost to buyers preparing themselves for auction day by obtaining LIMS, building inspections and valuations for each property and how this cost was eroding their deposit.

It was suggested that an information pack prepared by the vendor and at their cost, containing a LIM, price indication or valuation and a building inspection would eliminate this problem for purchasers. I agree with this idea, but it is not without it’s problems.

Firstly, as Fair Go highlighted there is no regulations around who can be a building inspector, therefore how do you know that the building inspection given to you as a buyer is worth the paper it is written on. I have seen huge variations in building inspection reports on the same property.

Secondly the valuation would be addressed to the vendor as they instructed the valuer to complete the work. Most financial institutions will not accept this valuation unless it is in the name of the person wanting the loan or addressed to the bank. Therefore a new valuation will still need to be sourced by any successful purchaser to satisfy their banks requirements. Financial institutions also have lists of valuer's that they have approved, so you would need to ensure that the vendor’s valuer is on your banks list. You can’t just go back to the valuer and ask them to change the name on the valuation; they will need to seek permission from the vendor, as there is a conflict of interest. You will also still need to pay for this valuation; if the property is sold for less than the vendor’s valuation you could well expect yours to be adjusted accordingly.  Alternatively you may engage a different valuer.

There has also been a trend lately of purchaser’s solicitors requesting that their clients obtain a new LIM in their name. The reason being if the purchaser needs to rely on the information in the LIM for legal reasons then it needs to be in their name, not the name of the vendor or the real estate agent.

All that being said, it is reasonable to expect that when you are a serious purchaser for a property going to auction or tender that you will be provided with an information pack which contains:

• The LIM, this should be an up to date version.
• A current title to the property and any documents recorded on the title.
• Sales evidence of similar properties sold in the vicinity.
• An information sheet highlighting the features of the property.
• A copy of the Auction Conditions of Sale.
• The REAA guide for purchaser's.

In my opinion this is the minimum amount of information that should be provided. Some properties require more and I think that this is advantageous for both the vendor and the purchaser. The easier we can make it for purchasers to buy a property then the more purchasers will want to own that property. With the time constraints of auctions putting pressure on purchasers to complete their due diligence, why not make it easier for them?