The right time to conduct a building and pest inspection

The inspection report contains significant details about the real estate asset, from minor cosmetic damage to major structural faults, which you can use to negotiate purchase prices or alter the contract or settlement terms.

She said: “It may seem like overkill to conduct a building and pest inspection on a property that you are yet to make an offer on, but it should be seen as non-negotiable.”

“Buying property is generally the biggest financial decision a person will make in their lifetime. For that reason, it is essential to be sure the property really is what it appears to be.

“A building and pest inspection report is [also] a valuable tool for property investors, as it can almost always be used to negotiate purchase prices down or alter the contract or settlement terms. No property is perfect, and even minor defects can give you significant leverage when bargaining,” Ms Brown added.

However, conducting a building and pest inspection prior to signing a contract may not always be an easy demand to make, especially if the vendor is looking for a fast sale.

In this circumstance, you can protect yourself by listing the building and pest inspection as a condition of the contract, according to Ms Brown.

“[You can write] ‘Subject to building and pest inspection.’ A solicitor can check the wording of the clause to ensure you are covered,” she advised.

Meanwhile, if the property is going to auction, she strongly encourages doing the inspection prior to auction day because, once you are successful under the hammer, you are already obligated to purchase the property—without any cooling off period.

If you fail to conduct an inspection, you are essentially accepting any building faults, which the vendor is under no legal obligation to disclose.

Moreover, since you have made a non-negotiable commitment, you are not allowed to negotiate prices anymore, even if you find significant property faults.

Ms Brown said: “If you neglect to conduct an inspection before auction, you could find yourself in a difficult position, as the property faults could be substantial.”

Negotiating prices

In order to maximise your opportunity to use an inspection report as a bargaining tool, Ms Brown highlighted the importance of knowing which building faults are actual “deal breakers” and which are “easy fixes”.

The report will contain non-material faults or are issues that are easily repairable, which include broken tiles, leaky taps, loose doorknobs, hairline cracks, and jarred windows.

It will also specify big causes for concern, or material faults, which include termites, structural faults, electrical faults, rising damp, major water penetration, and more.

Despite its glaring difference from non-material faults, material faults are not necessarily bad news, Ms Brown said.

In fact, you can use them to your advantage by bringing the issues up to the vendor as a way to negotiate a decrease in the purchase price.

Moreover, according to her, if you have pre-existing plans to renovate, defects in the property may be considered as blessings in disguise. 

Ms Brown said: “Even if the report lists only minor imperfections, it is still enough to bargain down the price by at least a few thousand dollars, which quickly justifies the few hundred dollars spent on the independent inspection report.”

“Chances are, though, there will be something significant on the report that you will be glad to have found out prior to purchase” she added.

In order to conduct a thorough inspection, Ms Brown strongly encourages seeking the help of a surveyor, a licensed builder, or an architect.

According to her, these professionals often carry an appropriate qualification to conduct a building inspection, which should comply with the Australian Standard.

“Independent inspections are conducted by an impartial party, which means full disclosure and no bias on reports,” she concluded.