Building and Pest Inspections: What You Can Still Negotiate

A building and pest inspection costs a few hundred dollars and routinely finds problems worth tens of thousands. It is the best value money you will spend on a purchase, and yet it is the step first home buyers most often skip, usually because the auction is on Saturday and the report cannot be arranged in time. That is an argument for starting earlier, not for going without.

What the inspection actually covers

A standard pre-purchase inspection is a visual assessment of the accessible parts of the building by a suitably qualified inspector. Expect comment on the condition of the roof and roof framing, walls and structural movement, subfloor and stumps, wet areas and signs of water damage, drainage, decks and balustrades, and visible condition of services. A timber pest inspection looks for evidence of termites, borers and fungal decay, and for the conditions that invite them.

What it does not cover is just as important. It is visual and non-invasive: the inspector does not cut into walls, lift fixed floor coverings, move the vendor’s furniture or dismantle anything. Areas that cannot be safely accessed, a sealed subfloor, a roof space without a hatch, a wall behind a built-in wardrobe, are excluded and will be listed as such in the report. An inspector is also not certifying compliance with building permits or planning controls, not valuing the property, and generally not assessing the electrical, plumbing, gas or pool safety systems in the detail a specialist trade would.

Read the exclusions section first. A report that says the subfloor was inaccessible is not telling you the subfloor is sound; it is telling you nobody looked.

Timing, and the auction problem

For a private sale, the sensible order is to have the contract and vendor’s statement reviewed and the inspection done before you sign, or at minimum within the cooling off period while you still have a way out. For an auction there is no cooling off, so the inspection has to happen beforehand or not at all.

That is genuinely expensive if you attend several auctions, which is why buyers often take a staged approach: do your own careful walk-through and the free checks first, commission a full inspection only on properties you are seriously prepared to bid on, and ask the agent whether an existing report is available. Treat a vendor-supplied report with appropriate caution. It may be perfectly honest, but it was commissioned by the other side, it may be months old, and you generally have no contractual relationship with its author if it turns out to be wrong.

Making the contract do the work

On a private sale you can ask for a special condition making the contract subject to a satisfactory building and pest inspection. Vendors and agents resist it, and in a competitive market you may not get it, but it is worth asking. If it is included, the drafting determines whether it is useful:

• Who decides whether the report is satisfactory. A clause where the purchaser’s opinion governs is far stronger than one requiring an objective defect.
• A monetary threshold, so the condition is triggered by defects costing more than an agreed figure rather than by any blemish, which vendors find easier to accept.
• A realistic date, allowing time to book an inspector and receive a written report.
• What happens on termination: that your deposit is refunded in full.

As with a finance condition, the benefit is lost if you do not give notice in the way and by the date the clause requires. These conditions sit alongside each other and both deserve the same discipline, which we cover in our note on cooling off and finance clauses.

What to do with a bad report

Very few reports come back clean, and a long list of minor items is normal for any house that is not new. The task is to separate cosmetic and maintenance items from the handful that matter: active termite activity, significant structural movement, a roof at the end of its life, rising damp, failed waterproofing in wet areas, and anything suggesting unpermitted structural work.

Get the serious items quoted by a relevant trade before deciding anything, because your negotiating position is only as strong as the number you can put on the table. Then choose: proceed and absorb it, having priced it into your bid; ask for a price reduction reflecting the quotes; ask for rectification before settlement, with a retention at settlement if the work is not finished; or walk away. Which of those is available depends entirely on whether you are still conditional. Once a contract is unconditional, a bad report is information, not leverage.

Remember too that the vendor’s statement discloses building permits only for a limited recent period, so older unpermitted work may appear nowhere in the paperwork and only surface in an inspector’s comment about a suspiciously recent-looking extension. That is a thread worth pulling, and our guide to what to look for in a Section 32 explains what the document does and does not tell you.

Apartments and units

For a strata property, an inspection of the interior tells you only part of the story. The building’s structure, roof, facade and common services are the owners corporation’s responsibility, and the real risks sit in its records: a known defect, pending litigation, a special levy under discussion, or a maintenance fund that is nowhere near adequate for a building of that age. The owners corporation certificate and the minutes of recent meetings are the documents to read, and they often matter more than anything an inspector will find inside the unit itself.

We review contracts and vendor’s statements for first home buyers across Melbourne, including owners corporation records and inspection outcomes, with pricing disclosed up front and no surprises. Book a free first consultation, or see how our conveyancing service works. Our guide to buying at auction covers the timing pressure this creates.

Frequently asked questions