In 2012, Property24 wrote an article regarding the Ins and outs of home inspections in SA.
"In South Africa, we estimate the figure for houses costing in excess of R1 million that are inspected is still less than 1 percent of an estimated 5 500 houses per month being sold currently."
This had followed an article on how a couple bought what they thought was a dream home only to discover that the property had defects long after the sales agreement was signed.
Read the article here.
At the time of writing the second article, Max Lourens chief executive officer of the Home Inspection Training Academy (THITA) and the South African Society of Home Inspectors (SASHI) noted that it is essential that the industry (home inspections) be recognised in South Africa formally as it is in most other countries.
SASHI wrote a Model Bill in 2008 in conjunction with the American Society of Home Inspectors (ASHI) and the State of Louisiana and presented it to the Minister of Housing for consideration as a way to regulate the industry.
Click here to read about it.
Over a year since this article was published, home inspection is still not legislated in South Africa.
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.
In South Africa we estimate the figure for houses costing in excess of R1 million that are inspected is still less than 1 percent of an estimated 5 500 houses per month being sold currently.
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.
The 80 percent market penetration by home inspectors of the US real estate market has occurred because US buyers now recognise that it is a “no brainer” to spend less than 1 percent of the value of the houses ensuring that there are no hidden major defects.
Furthermore, he notes that estate agents and the EAAB continue to place reliance on a “seller’s declaration”.
He notes that this is also because the US is an extremely litigious society. 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.
Voetstoots
Voetstoots clauses are standard in most estate agent offer to purchase documentation.
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.
The voetstoots clause is very useful in protecting sellers and agents who may be unaware of defects in the house.
However, without the balancing protection of a home inspection the buyer is very exposed to risk, he says because the buyer has no way of knowing the voetstoots condition of the property he or she is agreeing to purchase.
For this reason, he says 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.
But, home inspections are also not cheap, however, in an effort to make home inspection more affordable HouseCheck has launched HouseCheck VITAL, a house inspection which is 20 percent cheaper than the HouseCheck Comprehensive inspection, and documents only significant defects in the roof, roof cavity, walls (including doors and windows), foundations, geyser and storm water management.
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.
An average HouseCheck Comprehensive report costs R3 500 – an average VITAL report for the same house would cost R2 800.
Home inspection courses
Graham explains that once regulation or legislation kicks in and it is feasible to define home inspection in terms of officially accredited training benchmarks, it is anticipated that South African banks may well start making their bond lending subject to a home inspection report.
This will provide significant consumer protection for SA home buyers, he points out.
In the meantime, he says the South African Home Inspection Training Academy which grew out of HouseCheck, has developed a comprehensive home inspectors’ course which specifically addresses South African building conditions and regulations.
“This is the only home inspection course currently available which adequately covers all aspects of the South African home building envelope."
Home inspectors need to be “all rounders” equipped with a sound knowledge of all components of an average South African house.
The SAHITA study modules include topics such as home inspection basics, the legal framework, problem soils, the foundation (sub structure), inspecting the roof and electrical installation among others.
SAHITA has been consulting with various official bodies with a view to getting the SAHITA course accredited by the SA authorities – QCTO, Services Seta and the Department of Higher Education.
Talks have also been held with the NHBRC, Estate Agency Affairs Board, Construction Seta, the Consumer Protection Commission, the Department of Human Settlements and the Council for the Build Environment.
Unfortunately accreditation of such a new field of study is proving to be quite a long and bureaucratic process.
The SAHITA course material, which is offered online, has been endorsed by InterNACHI International and by HouseCheck, according to Graham. – Denise Mhlanga
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