Pre-purchase inspection reports for buyers
A building inspection is one check you can get done before buying a property. It is sometimes referred to as a ‘standard property report’.
As a prospective buyer, when you ask for a contract of sale, the agent must inform you about previous property inspection reports that have been commissioned. You might be able to negotiate a cheaper price to repurchase a report. You can also do your own personal inspection, but getting a written building inspection report will give you all the information you need.
The building inspection report
The building inspection report is a written account of the property’s condition. It will include any significant building defects or problems such as rising damp, movement in the walls (cracking), safety hazards or a faulty roof. It is usually carried out before you exchange sale contracts so you can identify problems which, if left unchecked, could prove costly to repair.
Why you need a building inspection report
Benefits of getting a building inspection report done before buying a property are:
- knowing in advance what the problems are
- using the information to negotiate a lower price for the property ie. you may have to pay to repair some of the problems
- gaining specialist advice about any major problems and how they will affect the property over time.
Choosing the right person to inspect the property
Always use a suitably qualified person such as a licensed builder, a surveyor or an architect to provide a professional building inspection report of the property. These professions should see through any cosmetic improvements covering up faults that might otherwise be missed by an untrained eye.
Ensure that the person you choose has adequate insurance cover, particularly for professional indemnity.
Contents of the report
The report’s format, detail and cost will depend on the type of property and the process used by the consultant or organisation to prepare it.
There is an Australian Standard that pre-purchase building inspection reports must comply with, but this does not include style or content.
What the inspector should check
Make sure you specify any particular items or areas on the site that you would like to be inspected.
Accessible parts of the property
The inspector should check all accessible parts of the property. These include:
- interior of the building
- exterior of the building
- roof space
- under-floor space
- roof exterior
- the site, including:
- garage, carport and garden shed
- separate laundry or toilet
- small retaining walls (i.e. non-structural)
- steps
- fencing
- surface water drainage
- storm water run-off
- paths and driveways.
You may also ask for a particular item or part of the property to be inspected, such as:
- visible signs of asbestos
- existence of an operable electrical safety switch
- operable smoke alarms.
Other details
The inspection report should also include the following information:
- your name
- the address of the property to be inspected
- reason for the inspection
- the date of inspection
- the scope of the inspection
- a list of any area or item that wasn’t inspected, the reasons why it wasn’t inspected and if necessary, a recommendation for further investigation
- a summary of the overall condition of the property (considering its age and type) and any major faults found in the property
- a list of any significant problems that need fixing
- if necessary, a recommendation that a further inspection or assessment be carried out by a suitably accredited specialist, for example:
- pest inspector
- electricity supply authority
- water supply authority
- structural engineer
- geotechnical engineer
- surveyor or
- solicitor.
Things not included in the report
A building inspection report does not deal with every aspect of the property. Its role is to identify any major problems visible at the time of the inspection. The extent of a problem will be influenced by the age and type of property.
While giving valuable expert advice, the report will not generally include:
- parts of the property that were not or could not be inspected
- matters outside the consultant’s expertise
- an estimate of repair costs
- minor defects
- termite detection.
A building inspector would not normally check such things as:
- footings
- concealed damp-proofing
- electrical wiring and smoke detectors
- plumbing, drainage and gasfitting
- air conditioning
- swimming pools and pool equipment
- watering systems
- fireplaces and chimneys
- alarm and intercom systems
- carpet and lino
- appliances such as dishwashers, waste disposal units, ovens, ducted vacuum systems, hot plates and range hoods
- paint coatings
- hazards
- every opening window
- television reception.
Building inspection in strata schemes and company title properties
With strata scheme and company title properties, the building inspector will normally only inspect and assess the condition of the interior and immediate exterior of the unit. If you want the consultant to inspect other common property areas you will need to request a ‘special–purpose’ property report.
Minor defects
Most properties will have minor defects such as blemishes, corrosion, cracking, weathering, general deterioration, and unevenness and physical damage to materials and finishes. If you want the consultant to report on minor defects and imperfections, you will need to ask for a ‘special-purpose’ property report [link down page].
Factors affecting the report
Certain conditions will affect the final report including:
- problems difficult to detect due to weather or other conditions such as rising damp and leaks
- the information you provide to the consultant
- the specific areas of the consultant’s ‘expertise’ as specified in the report
- problems that may have been deliberately covered up to make an area appear problem free.
Using the report for other purposes
A building inspection report should not be used as a certificate of compliance for any law, warranty or insurance policy against future problems. It is also not intended to estimate the cost of fixing problems, for which a ‘special-purpose’ property report is needed instead.
Ordering a report
Most consultants need a minimum of 2–3 days' notice to do a building inspection. You should get the vendor’s permission to have the property inspected as early in the sale negotiations as possible. This will help you decide if the property is worth buying. There may be little point in spending money on conveyancing until you know the condition of the property.
Inspections done during the cooling-off period
When you buy a property in NSW, there is a 5 business day cooling–off period after you have exchanged contracts. During this period, you may get out of sale as long as you give written notice. Notice is usually given to the seller’s real estate agent or lawyer or conveyancer, but you will forfeit 0.25% of the purchase price if you do so. The cooling–off period starts as soon as you exchange and ends at 5pm on the fifth business day.
A cooling–off period does not apply if you buy a property at auction or exchange contracts on the same day as the auction after it is passed in. Always check with your solicitor or licensed conveyancer that you have a cooling-off period, and have the process explained to you.
To get a building inspection done during the cooling–off period, give the consultant as much notice as possible. They will have to do the inspection, prepare the report and still give you time to decide and potentially withdraw from the contract. If you withdraw, you forfeit 0.25% of the purchase price.
Other types of reports
A special–purpose property report normally covers the same items as a building inspection (pre–purchase property inspection) report. It may also include:
- a cost estimate for fixing major problems
- a list of minor problems
- a recommendation of the repairs and maintenance work needed.
Check with the building consultant for information normally included in their reports. Inform them if you need extra information.
While the building inspection report should identify any visual damage caused by termites, it won’t include whether termites and other pests that destroy timber are still around. You should get a pest inspection done as well, especially if the property is located where termites are a known problem.
Vendors may get a building report on the property they are selling to give to interested buyers. This can help but it is not a substitute for your own independent report.
An electrical inspection can sometimes be included in the overall pre-purchase building inspection.
If your building inspection does not include an electrical inspection, you may wish to consider paying for a licensced electrician to complete one. Old and faulty wiring is a common cause of fires and injuries by electrocution. Over 300 people every year are admitted to hospital because of electrical problems in their homes.
Many old homes have never had their wiring upgraded and wiring safety and efficiency have come a long way in that time.
Getting an electrical inspection before buying a home will help identify any electrical problems and help keep you safe as well as avoid expensive repairs after you have purchased the property.
Loose-fill asbestos is unlike other forms of asbestos. The building inspection report won’t confirm the presence of loose-fill asbestos and it can't be identified by sight alone. The only way to confirm whether a home is affected by loose-fill asbestos insulation is to have it tested by a licensed asbestos assessor.
If the test results demonstrate the property is affected, owners of premises built before 1980 may be eligible for inclusion into the NSW Government's Voluntary Purchase and Demolition Program.
Visit the loose-fill asbestos insulation page for more information.
If the property you are looking at has a swimming pool check that the pool is fenced and meets requirements. Visit the pool safety checklists page on the NSW Swimming Pool Register for more information.
For information on swimming pool certificates, visit the swimming pools page. Be aware that unless the seller agrees to fix any issues and obtain a compliance certificate before settlement, a non-compliant pool becomes the buyer’s responsibility to resolve, typically within 90 days of settlement. Speak to your solicitor or conveyancer if you have any concerns about pool compliance, or contact the local Council for more information.
If you are not satisfied with a report
If you are not satisfied with any aspect of the report or your dealings with a consultant, try to resolve the problem with them first. If they are members of an industry association, you may be able to get access to a free complaint handling service.
If you buy a property and later find problems not identified in the building inspection report, you should seek legal advice, particularly if the consultant’s negligence ends up costing you a lot of money. We strongly recommended that you only use consultants that have adequate insurance cover, particularly for professional indemnity.
Fixing problems
When using a builder or tradesperson for work where the value is over $5,000 the builder or tradesperson must:
- be licensed for the work they are doing
- provide you with a written contract where the value of work (labour and materials) is over $5,000
- give you a copy of the Home Building Compensation Fund certificate for the work before taking any deposit and before starting the work if the job costs more than $20,000 (some exemptions apply).
Visit home building and renovating for more information about your rights and responsibilities when hiring a builder or tradesperson.
Use the Verify NSW licence check to make sure the builder or tradesperson has a licence.