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A building inspection identifies all necessary repairs, gives you ammunition to negotiate the price with, and allows you to rule out properties with serious defects. The purpose of a building report is to tell you every single thing that could be wrong.
I don’t suggest you look for a perfect score card because you’ll never get it. You’ll end up never buying anything. As long as you’re aware of any defects and know how serious they are, how they can be rectified and at what cost, you can make an intelligent assessment to buy or not.
Buyers can definitely freak out over building reports. This more often happens with older homes. I’ve sold a lot of period properties in my time and issues are expected! Houses were made differently back then, using different materials and methods of construction. But if you want to buy a period home with all the amazing character features that come with it, you need to get used to seeing building reports with defects.
For example, say you’re looking at a Victorian terrace and the building report tells you there is no damp proof course (protection against rising damp). It sounds bad but this is actually common in Victorian terraces. So if you want to buy a property from this era, every one that you look at will probably have the same issue.
Written building reports can look pretty scary. They’re long, detailed and have a lot of disclaimers. Always talk to the inspector and share your concerns, as they’re working for you – not the vendor. You can also get some advice from your solicitor, as they see these reports all the time.
If the house has defects, that doesn’t mean you shouldn’t buy it. A building report can unveil a whole range of potential problems but that doesn’t mean you should walk away. It just means you’ll be buying with your eyes open. If you’re concerned about the potential defects, it’s a good idea to meet the inspector at the property. They can show you any significant problems and talk you through the costs of rectification. I’ve seen sales that could have fallen over based on the written report, but I’ve encouraged the buyer to meet the inspector on site and their talk through the solution.
The benefit of defects is you can use them to adjust your offer. Ask the inspector for an idea of what the repairs might cost and deduct this from your offer. If there is a substantial amount of building rectification necessary you might want to drop your offer by $10,000 or $20,000 to allow yourself to do that work.
Having worked in real estate for more than 30 years, I’m always astounded by the small percentage of people who get reports before purchasing a property. This is one of the most expensive investments of your life so you need to do your due diligence, and a pest and building report is an essential $500 insurance policy.
Pest and building reports only get expensive when buyers keep missing out on properties. Some agents are seeking to make reports more affordable by suggesting their vendor pays for them, so they’re immediately available to buyers. Other times, the vendor will pay a small amount to get the inspectors out, with the inspectors then on-selling the reports direct to buyers for a reduced amount. They probably make more money for themselves this way, the vendors pay only a small amount to help their sale along; and the buyers actually save money.
If you’ve missed out on several properties and lost a few thousand in pest and building reports, I really do sympathise. I suggest going back to your research and making sure your buying expectations are in line with the market. Maybe you’re assuming you can buy more for the money you have available and that’s why you keep missing out?
At the end of the day, you need to keep getting those reports on properties you’re serious about. It’s not worth saving $500 to buy a property that might end up being full of termites and about to fall down.
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.