Buyers Due Diligence during COVID-19

During COVID-19 we’ve seen agility within the property development industry and other property related industries.  As buyers prepare for settlement, there are some prudent information that should be considered to ensure greater understanding of what may impact property settlement when settling during a pandemic crisis. 

 Finance Delays 

Like all organization banks are not immune to the impacts of COVID-19, with WFH arrangements and impact to their supply chain some buyers have experienced delays in obtaining finance due these impacts. It has been reported these delays have extended obtaining finance approvals of up to 4 weeks. 

Be sure to touch base with your lender to understand their delays and to ensure you meet your contractual obligations when obtaining formal approval if settlement of your property is in the horizon. 

 Formal Finance Approvals are only valid for 3 months, coordinating the timing of this approval with your settlement date is crucial to ensure it does not lapse. 

Remote Valuation in place of a full physical inspection

During COVID-19 Valuers have also adapted the way they conduct valuations.  With precautionary measures implemented and personal self-care.  API has developed a recent valuation protocol relating to Crisis/Emergency situations as their members to continue to conduct valuations during COVID-19.  The protocols guide for utilising a range of technologies as an interim alternative to enhance external and internal valuation inspections in place of a full physical inspection. The protocols have been drafted to extend to all property types and include statutory valuations. 

This valuation protocol will impact all property types of valuation. This will mean that, if you are selling your current property to purchase a new one, it may mean the bank valuers may value both properties remotely.  If this might be the case, have the conversation with you lender or valuer if you have any concerns around this and how they may conduct and ensure it’s in lines with the valuation protocols. 

To learn more about API’s protocols click below:

1. API Valuation Protocol – Crisis or State of Emergency
2. API Valuation Protocol – Significant Valuation Uncertainty (version 2)
3. Addendum to the ABFI Residential Valuation Standing Instructions

Do not forgo Pre-Settlement Inspections 

Prior to settling on your new build, in most contracts a Pre-Settlement inspection (PSI) is a must.  A pre settlement inspection is designed to ensure that everything stipulated in your build contract is in fact there and more importantly to conduct quality due diligence of the build.    It remains possible for buyers to settle without a PSI, but buyers must not skip this step despite the pandemic based on difficulty. Always arrange an inspection, your builder or developer should work with you on arranging this with the government measures in mind.