I woke up today disappointed but definitely no regrets  Unfortunately the property was not cheap and if anything, it was being marketed as over the market value for that area and the vendor was offered a figure closer to the asking price. He decided to accept my lower offer which was still within market value. The real estate agent had no idea that the strata was about to increase and there were long term remedial works planned. This will not be reflected in the price. They just hope the next buyer won't discover the problems. As the real estate agent said, most people don't do reports.

There is no such thing as a cheap building advertised  in Sydney until you discover the problems yourself at cost and then negotiate a lower price. So not only do we have to pay higher prices and ugly designs, we can't expect it to be structurally sound either. Here is another bullet I dodged which are being currently being marketed at $465k for a 1 br apartment – http://www.dalgetysquare.com.au/display/property_detail/254 

Dalgety Square, Jones Street, Ultimo
Defect assessment and liaison with Office of Fair Trading representatives in establishing extent and nature of control joint, rooftop terrace and wet area waterproofing deficiencies, internal courtyard balcony deterioration and rectification measures, and water penetration of façade.  Coordinate tenders and reconcile with recommendations to client.  Liaise with specialist consultants in completion of works outside our expertise.  Approximate remedial cost $4.5 m, excluding fire protection issues being assessed by others.

Update: I spoke to the engineer who did the initial report in 2009. He did the report as part of an insurance claim. He remembered the building quite well and told me to be careful which I took to mean stay the heck away from that building! He said that there are definite water penetration problems and the cost of fixing it would be in the realm of $300k – $400k. I said that they don't seem to want to acknowledge they have a problem and he was in kind of disbelief about that. I was very happy he spoke to me because I didn't think he would.

I also spoke to the architect before him who is an interesting character. He said to me that he looked at the building and that there wasn't any major problems with the building and that about $50k would cover it. He also said on top of the $150 extra for the admin fund, there would also be a rise in the sinking fund and he thinks an appropriate figure would be $5k/yr (currently $2,584). He was a very strong character and I believe it would be difficult to convince people we should get an independent engineer report and waterproofing report as the engineer suggested.

I spoke to the agent to give him a courtesy call to let him know I was resciding the contract. I could have got a price reduction of at least $5k but in the end decided I'd only be breaking even and it wasn't worth the hassle. The owner's corporation did not seem to recognise there was any problem so that was the first hurdle I'd have to overcome let alone trying to convince everyone to pay for the repairs. And the more they prolong repairing the building, the worse it will obviously get and lead to an even bigger expense.

The agent gave me a major guilt trip about how they had an offer for $8k more but took my lower offer instead and said that he could sell this property for a much higher amount. I said of course you can because you have already told me most people don't do checks and people in Sydney are stupid but I thought I paid a reasonable price for the property and that was all I was prepared to offer. Up to them whether they accept it or not.

Thus, I've rescinded the contract. The conveyencer hasn't mentioned any additional fees as yet and the invoice for the strata report was emailed directly to me (worth every cent) and was $40 under the quote so I'm about $2k out of pocket. I will use a different building inspector next time as they didn't pick up any of the problems, only drummy tiles and I'm not convinced they did the best job.

Thanks for all your responses. I'll change states although I think I prefer NSW's 5 day cooling off period rather than VIC's 3 day period? I think that's correct

The report says that the membrane is defective and that flashings require attention. The solicitor says the problem seems to be localised and not systematic but says there are breaches of the Home Building Act but hey forget about getting any money back from the buyer or developer, just 'own' the problem and fix it. I don't know why he doesn't suggest going through insurance but says pursuing the builders is a waste of money.

The agent has spoken to the vendor and he said he's fixed most of the problems he submitted in his survey and he's listed jamming doors, broken exhaust fan, cracks on walls, paint work, sliding shutters, jamming, just to name a couple. I mean isn't that a lot of problems for a 3 yr old apartment? He's obviously Mr Fix it but I'm far from that!!!

There are commercial buildings located underneath the property such as restaurants etc. I think I might pop down and speak to them tomorrow and try and get more of a grip on the problem? There seems to be a problem with every single property I've inspected in Sydney. I know older properties are sometimes a lot better than new but new properties offer security which older properties don't always do.

I just wish they had already ordered the report and I knew what I was in for exactly. I'm not looking for a perfect building but I don't want to be constantly opening my wallet either. From the responses I have received, it doesn't seem that I'm being over cautious?

Thank you very much for your responses. I've just been reading another document I sent. Some points taken from there:

– says there is little point in wasting funds trying to get money from the builder because they are unlikely to be successful and suggests instead to create a maintenance plan. Says both builder and developer are in adminstration.
– says the issues are localised and not systematic and that isolated repairs should be done
– says there should be an integrated maintenance plan
– says an amount of approx $50k is anticipated (the lady who did the strata report says they need to get an engineer's report which may cost up to $20k)
– at first instance a special levy may be required in light of the current savings ($60k) and the action plan

I got a building and pest inspection done. There mention of cracks in the walls in the laundry and the real estate told me the owner fixed a crack in the kitchen area and has just recently repainted the apartment (another story but he didn't want to sell, not sure why). When I questioned whether I should be concerned about the cracks, I was told no. I will speak to him again.

Shape wrote:

If this is a brand new listing and the agent havn;t had any "serious" buyers…then it be hard to pull the price down… On the another hand, if this property been listed for 40+ days i find it's soooooo much easier to bargain and the agent tend to be more "understanding " If you want to see how long a property been listed for go here- http://refindhouseprices.com/ Regards

The property has been listed for almost two months. I viewed the property when it had been listed for three weeks and put in a counter offer around the 5th week. Believe me, this process has been anything but easy  but I am quite proud of myself for speaking to the agency and putting the second offer through another agent.

There is even another apartment which has been listed for 6.5 months in the same block and the owner wants $390k when her apartment needs about $4k work and the apartment I posted about  in the same building is listed for $389k and is immaculate. 

I love looking at that website which I found out about from this forum & put it on my Facebook and Twitter account!

I have sent you a PM. Let me know if you have received it. I'm not sure if they are working!

Fully: The property I put in an offer for is advertised at $389k. I've spoken to the agent and he has told me they are only accepting offers that are $385k plus. The  agent told me that once they dropped the price to $389k, they would sell in a week. Hmmm … it's still being advertised a month later. I don't whether the sellers are delusional or if it's the agents who are feeding that delusion. I'm not sure how long your property needs to sit on the market before you realise that the price you set may not be achievable in the current market.

And that's another thing, sellers who paid too much for a property off the plan and expect buyers to pay a higher market price for it to cover their losses or sellers who want to sell it in a year or two in an area where the market hasn't moved significantly but are not prepared to take a hit. I will be interested if you get the 'call of shame'. After six weeks on the market, I think $265k is quite a good offer if they are asking for offers over $269k but what do I know

If you have put an offer on a property and it has been rejected but the property is still on the market, how long would you wait before approaching the agent again? The two properties are still on the market. One has been on the market for 6 months and the other property has been listed for almost 2 months now. Both of the owners (of each property) don't seem very open to negotiation.

Thanks for that Kane! Bankwest is still my frontrunner but as their pre approval process doesn't count for much, I've decided to hold off applying for now. As I've got a 30% deposit (genuine savings), no debt, I've been in my present job for almost 2 years and a clean credit history, the mortgage broker doesn't forsee that I'd have a problem getting a loan. There seems to be all sorts of specials happening at the moment. Thanks for all your help – appreciate it!

Woah! This post exploded overnight. God_of_money, you hijacked my post but that's ok haha. Thanks for your advice Michael. My mortgage broker said I was 'vanilla' – I took this as a compliment. She meant that she can't see any problems as I don't have any existing debt, a good wage and over 20% deposit so hopefully there shouldn't be any problems. I shall think about this on the weekend as I have an appointment with her on Monday. Thanks everyone!!!