Many buyers don't understand the importance of getting a building and pest inspection prior to purchasing a property. Knowing what's contained in a building and pest report is vital before making such a large financial decision.
Basically, you're hiring a licensed inspector to examine the entire property, and the results are documented in a report. The report will include obvious and hidden flaws such as structural defects, cosmetic defects, termite/pest activity and so on. Most reports these days will also include lots of photos which is particularly important for interstate purchasers, who are buying a property 'sight unseen'.
Buyers should use building and pest inspection reports to estimate the risk of the property and to determine the true value of the property. It will help you understand if there'll be any future maintenance costs if you were to proceed with the purchase.
We've outlined some of our tips that can help you better review and understand a building & pest report.
Tips To Reviewing & Understanding B&P Reports:
Have the right mindset. Remember that the objective of a builder's report is to identify issues with the property - they're not there to persuade you to buy the house. As a result, you're not going to see any comments in their report stating how wonderful the property is. In fact, every builder's report will put your willingness to buy to the test.
Don't expect the property to be perfect. There are issues with every era of construction, even newly completed properties. Older houses may have more upkeep required or some minor cracking caused by sediment movement over the years, but they're located in the most desirable areas, close to both amenities and public transportation. What we generally look out for in these reports are structural issues or termite workings/damage, as these items can be quite costly to fix with no real value-add. When spending money, the objective is to 'improve' the property in order to manufacture equity or increase cash flow. There are very few structures that are perfect in every way.
Chat to the inspector. Once you've received the building & pest reports, give the inspector a call for more details and an understanding of any defects, if necessary. It's much easier to clarify things over the phone and it also might not seem as bad as they appear on paper - building & pest reports use templates with standard terminology to protect the inspectors against liability.
Ask the right questions. A builder's report will almost always reveal problems in a home that may require a significant financial commitment to repair. It's difficult to compare a home that was constructed many years ago to a home built today, since building standards are always being updated and improved. For example, newly constructed homes must have their downpipes connected to stormwater whereas back in the day, downpipes were allowed to drain directly onto the surface/yard. Most vendors are not willing to upgrade this simply because it's stated as a 'defect' on the report - it complied with the building standards at the time of construction. When going through the building report, you should ask: - Is it a major defect? - How urgent is it to fix? - Do you know the approx. cost to fix it? - Is it a common issue?
Obtain quotes/estimates to fix these issues. In most instances, the inspector will be able to provide you with a rough estimate on what it'll cost to fix a problem. For any major defects, I suggest obtaining formal quotes from local tradespeople prior to going unconditional on the contract, as you may find it could be in the tens of thousands of dollars that you haven't accounted for with your offer or you simply can't afford.
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I hope all of this info has been helpful and wish you all the best on your property journey. Please don't hesitate to get in touch if you have any questions.
Disclosure: The information contained in this blog is our personal opinion only and is not to be taken as financial advice, as we do not know your financial situation. Please speak with your accountant or any other licensed professional for specific advice based on your own personal circumstances. We will not be held liable for any losses.
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