How to Interpret Your Pest & Building Inspection Report

A property is a big investment and it is important you do your due diligence before committing to buying one. Professional pest and building inspections are a key part of this, as they help you uncover any hidden issues. They also provide a detailed report on the exact condition of the property and any renovation or remediation works required.

However, while pest and building reports can be incredibly useful, they can also be quite difficult to read. They provide a lot of information, and go into great detail, making it hard to tell what is most important. The language used is often also very technical and convoluted, particularly for those unfamiliar with building and construction terms.

Acknowledging this, we want to take a closer look at pest and building inspections and reports. As part of this, we will explore why and when they should be done, and what they should include. We will also share our advice on the key points to take note of, and what they actually mean.

Are pest and building inspections worth the cost?

While exact prices vary, pest and building inspections will add at least a few hundred dollars to your purchase costs. However, as they are not legally required, it is possible to buy a property without having these reports prepared. Recognising this, some investors choose to keep their costs down by forgoing these checks.

While this approach may save you money in the short term, it could cost you significantly over the long term. This is because pest and building reports give you a clear picture of exactly what you are buying. They also highlight the potential issues a property could present and the additional costs you may need to cover.

Importantly, these inspections are carried out by an independent third party with significant experience, and formal qualifications, in building and construction. As such, the report they produce should be an unbiased technical assessment of a property’s true condition. It should also identify issues that would likely be missed, even if you have inspected the property yourself.

When should a property be inspected?

Because of the cost associated, many investors choose to wait until the cooling off period to have a property inspected. To allow for this, they usually submit a conditional offer, subject to the results of the pest and building inspection. This means they can secure the property first, while still having an out, or room to negotiate further, if any serious issues are found.

However, we generally recommend organising to have inspections done earlier in the process, before you submit your offer. This means you can confidently proceed with the purchase, knowing what you are signing up for. It also allows you to submit an unconditional offer, which is more likely to be successful, particularly in a competitive market.

What’s more, the contents of an inspection report can help inform your offer and be used as leverage during negotiations. For example, if any serious issues are identified, your offer can take into account the price of the required repairs. Similarly, if several minor problems are reported, these can also be used to justify a reduced offer.

What should an inspection report include?

While there are standards dictating what must be included in an inspection report, the actual content can vary greatly. Different inspectors use different templates, which range from simple two-page “checklists” to much longer and more detailed documents. And, as a general rule, you get what you pay for, with more affordable reports usually lighter on the details.

Acknowledging this, there are a few things you should make sure your inspection report will include:

• Report summary: The document should start with an overview of the key findings, that highlights the most critical defects. This should make reading the report easier, allowing you to quickly understand the main issues the property presents.
• Defect overviews: The bulk of the document should be dedicated to the issues found during the inspection of the property. Ideally, these should be broken down by the different parts of the property (foundation, roof, specific rooms, etc.) they impact.
• Defect ratings: Each issue should be assessed for priority (how pressing it is) and severity (how big the impact could be). This will help you differentiate the defects and make it easier to tell which ones require the most immediate attention.
• Detailed photos: In addition to in-depth descriptions, good inspectors will also provide photographic evidence of any damage or defects they find. This helps document the existing issues and should support their assessment of the property’s condition and advice on required remediation work.

Before committing to using a specific inspector, we recommend requesting an example of their standard report. This allows you to check the format they use and confirm it will provide the level of detail you require.

What are the key things to watch out for?

It is important to acknowledge that most properties will have some issues – in fact, even new builds can have defects. As such, being an astute investor is all about understanding which issues are acceptable, and which are really worrying. For example, we generally pay particular attention to any mention of:

• Major structural defects: These will usually require urgent attention and, depending on what the issue is, can be quite costly to fix. Generally, they are caused by poor maintenance (which can lead to rot and rust) or damage from pests (like termites). If these are mentioned in a report, we generally recommend speaking to the inspector about the potential cost of repair.
• Mould: As this can cause serious health issues, it will usually need to be rectified almost immediately. Depending on how bad it is, mould removal is usually a fairly straightforward, and inexpensive, process. However, you will also need to address the underlying cause (leaks, damp, etc.) and any additional damage caused.
• Electrical wiring issues: In addition to being extremely dangerous, poor wiring creates certification problems, particularly if you are planning to renovate or redevelop. It can also be quite difficult and expensive to fix as the whole property may need to be rewired. As such, if electrical issues are identified, we recommend speaking to the inspector about what repairs would be required.

By contrast, these issues may sound serious, but are usually fairly easy to fix:

• Guttering or downpipe issues: These are quite common, particularly in older houses, and most problems can usually be quickly and easily fixed. For example, having downpipes reconnected to the stormwater system or a storage tank should only cost a few hundred dollars. However, if all of the guttering needs replacing (due to damage, etc), this can be quite expensive. As such, you should speak to the inspector about the scale of the issue and the remediation work required.
• Poorly maintained paintwork: Some scuffing or scratching of the paintwork is to be expected in any property that has been lived in. Giving the walls a good wash with sugar soap is cheap and easy to do, and should remove most marks. Unless it has been done recently, we also recommend repainting the property anyway, as it will make it feel much fresher.
• Asbestos lining: Inspectors, and most property investors, are very sensitive to the presence of asbestos – and rightly so. However, while this material can be dangerous, it is safe so long as it is not damaged or tampered with. Also, having the asbestos removed (by a qualified professional) should increase the value of the property, helping offset the cost.
• Sagging ceilings: While they may look really bad, wavy and uneven ceilings are often fairly easy to fix. If the ceiling material is still in good condition, it should be able to be reattached to the joists. If not, you may need to replace that section of ceiling, which can be costly, but should boost the property’s value.

Want to discuss this further?

If you would like to learn more about interpreting pest and building inspection reports, contact Search Party Property. As property investment experts, we have significant experience with these documents and appreciate the invaluable insight they provide. We also work with some of the country’s leading inspectors and can help you find one in your area.