Is a building and pest report really necessary?
Date Posted: Oct, 2017
When most property buyers inspect a potential purchase, they’re making decisions based on personal criteria.
They wander the layout and proverbially ‘kick the tyres.’ They silently wonder about a range of issues from, ‘Will this fit my furniture?’ and ‘Where will I display my canister collection?’ to perhaps, ‘Do I really need a trampoline room?’
These assessments are important, but when it comes to structural integrity, they’re superficial. Most buyers might be able to spot signs of cracking and shift, but many expensive hazards lie beneath the walls and ceiling.
Why pay for a building and pest inspection?
It’s said in real estate that you can’t beat good bones – but without the gift of X-ray vision, how can you ensure the framework holding up your new purchase isn’t already falling down?
Building and pest inspections are designed as a safety net for buyers.
Many contracts will be subject to a satisfactory building and pest inspection.
The clause allows a buyer to have an independent professional carry out a thorough examination and determine if there are structural weaknesses with a building – whether related to fragile foundations or ravenous white ants.
As a general rule, building and pest inspections are a great idea. If you have a low tolerance for risk of the unknown, they provide a measure of comfort and some modicum of recourse against the inspector if problems do arise.
And while the idea of having someone else to blame if things go awry sounds comforting, this shouldn’t be your primary motivation for commissioning a report.
Smart buyers use building and pest reports to determine if any issues with a property can be overcome, and the cost of necessary rectification. They can then make an informed decision about how to proceed with the purchase and, if needed, look to the seller for compensation.
I’m aware of property purchased some years back where a cavity-brick, 1950s home looked like very good buying for a retired couple set to downsize. “Solid as a rock” was the description provided in the listing.
Fortunately, the couple commissioned a building and pest inspection, which revealed a patch job to the roof where a leak had once been. Water damage to the unseen roof trusses meant they needed replacement – at an estimated cost of over $10,000. Fortunately, post contract negotiations saw the price reduced to cover the works. Crisis averted!
Sticking to the rules
The other element of inspections is to ensure any structures comply with building by-laws. Home handyman-built additions can be a nightmare. If they pose a hazard, you want to know early. In addition, if they don’t comply with building codes, you need to be aware a demolition notice may arrive from the council.
I’ve also heard of buyers who are serial users of reports as a negotiation tactic. Working on the premise that every building report will unearth some sort of trouble, they highlight the problems in every deal and demand compensation or threatening to pull out of the contract. It’s an adversarial approach to negotiation that can leave a sour taste with agents and sellers, and create a bad reputation for the buyer that’s tough to shake.
When you shouldn’t commission a report
There are moments when reports are an unnecessary expense, but they’re rare.
The most obvious is where the highest and best use of a property involves a demolition and clearing of the site. If your intention is to remove the structure, there’s little use in determining its ability to withstand a force 10 gale.
Another might be where substantial renovations are your strategy. In this instance, you may wish to have a builder assess the potential cost of your planned works as part of your due diligence, and they’ll address structural issues in that report.
Some may argue new homes don’t require a building and pest, but these aren’t immune from shoddy workmanship, so be cautious. In the case of a new build I would still advocate you get a “defect rectification” report prepared.
Another reason you may consider not doing a building and pest is to make your bid competitive in a multiple-buyer situation. This can be a high-risk strategy and should only be an option after carefully considering the worst-case scenarios if problems arise. Is it worth the financial headaches to secure a holding if there are serious issues? Experienced property advisors are usually best placed to help you make that call.
In most circumstances, whether buying your dream home or looking to acquire a ready-to-move-in investment property, building and pest inspections are a sound move. The key is to use a reputable, licenced inspector. Ask to check their public liability insurance and have them explain their standard exclusions and clauses so you’re fully aware of where their responsibilities begin and end. Make sure they clarify any adverse findings, and what rectification might cost you.
If you’re still unsure, entertain bringing in an independent property professional to look into the deal. Professionals who operate in particular markets and locations are well aware of the problems that can arise, including the nuances in localities, such as rising damp, swelling soils or a history of sunken shafts. Local experts can even help commission the right reports and renegotiate a deal if worries surface.