A buyer’s guide to building and pest inspections - The Community Leader and Real Estate New and Views
Real Estate


For many, buying a property is likely to be the most significant acquisition you’ll make in a lifetime, so a crucial part of the buying process is conducting a building and pest inspection to ascertain the condition and integrity of the asset.

A building and pest inspection is generally designed to reveal the hidden bones of the building, looking at structural integrity, any renovation work and its structural soundness, as well as identifying any past or present pest and termite activity.

Commissioning a building and pest report is worthwhile due diligence and provides an important tool for both buyers and sellers.

As a buyer proceeds through the steps of buying a property, it is highly recommended that any contract of sale is made subject to a building and pest inspection condition. Alternatively, a buyer may negotiate with a seller to conduct a building and pest inspection during the five-day statutory cooling off period. The key difference is that a buyer may be charged a penalty fee of 0.25% of the purchase price if they ‘cool off’ from the contract. It’s also important to understand, where a contract is ‘subject to’ a building and pest inspection, a seller is not required to rectify any problems discovered and not all defects and problems will allow a buyer to terminate the contract. A building and pest inspection is important due diligence to understand the condition of the property and based on that information, a buyer, acting reasonably, can decide if they wish to continue with the purchase.

When buyers visit an open home, unless they are a qualified building inspector it’s unlikely they can spot the hidden structural issues and defects that may be present. That’s why it is vital that a buyer investigates the condition of the property thoroughly prior to purchase, by commissioning a licenced and qualified professional, to ensure that there are no expensive and unexpected problems connected with the property. Also in this busy market, it’s wise to make sure you’re aware of the time it takes to book in your preferred professional and receive their report to ensure you reflect this in your condition timeframe.

It’s important to note that building and pest reports can’t cover absolutely everything and have various limitations – you’ll often see that the number of exclusions in the report disclaimers can be lengthy. A licenced and qualified inspector will have professional indemnity insurance and can’t provide advice outside of the scope outlined in their contract. If a particular item is outside of the report, they may make a recommendation to a third party such as their local council or a structural engineer for further feedback or a ruling.

Depending on the outcome of the inspection (and the specific contract terms), a building and pest report may provide the means to terminate the purchase should anything substantial and unsatisfactory be revealed.

Many people think it’s possible to use this report as a reason to terminate the contract or negotiate a lower purchase price but it’s not always that simple. For example, the standard building and pest special condition contained in the REIQ’s standard residential property contract does not give an automatic right to terminate a contract – the buyer must act reasonably. This will depend on the age of the property, the extent of the problems identified and the costs associated with rectification.

Major structural issues or severe termite infestation are some examples where it may be reasonable to terminate, but discovering a defect that may only require minor expenditure to repair may not be valid grounds for termination.

The purpose of the building and pest inspection is not to seek a sale price reduction or fund changes to the property after the contract has been signed. For example, as a buyer you can’t seek a $15,000 price reduction to fund a complete repainting of the house.

Remember, even if you, as a buyer, discover a defect in the property, you can always seek to negotiate with the seller rather than terminating the contract. Talk to the real estate agent and your lawyer about your options so you can make an informed decision.