Sellers and buyers should always get a building report. Vendors should know what problems – if any – they will need to repair or negotiate and purchasers needs to be aware of issues that could be of concern.
Vendors should commission a building report prior to marketing as it definitely takes the fear out of waiting to hear the outcome of the purchaser’s building report. Having a building report for potential purchasers to review also demonstrates transparency and can speed up the purchasing process. Purchasers should get a building report to ensure they will not have expensive repairs that could potentially be dangerous or affect value.
A property inspection report is a comprehensive account of a property’s general condition. It informs both the seller and the buyer of any problems that are present. Property inspections must also comply with Australian Standard (AS 4349.1). A qualified inspector visits the property and conducts a visual inspection of the following areas:
- the structural components of the property – including the foundation and framing;
- exterior and interior parts of the property – including the rooms, flooring and ceiling, walls, door and window trims for signs of shifting or shrinkage, stairs, railings, eaves, siding, porches, balconies, walkways, and driveways;
- roof system – including the space in it, shingles, flashing, and skylights;
- under-floor space;
- detached structures like carport, garage, shed, and separate laundry;
- retaining walls and
- other surrounding features like steps, fencing, paths and driveways.
You can request for other inspections that investigate potential termite or pest problems, health and environmental hazards like asbestos and lead, electrical switches and smoke alarms inspected.
The building report equips the vendor with information required to repair and improve the property and the sale outcome in several ways:
- It helps you understand the current condition of the property. Property inspections give you the chance to attend to concerns as soon as possible before you offer the property to buyers. If the problems are big it also may allow you to discount the price to compensate for the defects.
- It adds to your negotiating leverage. With an inspection report in hand, you have tangible proof to back up your claims as to the condition of the property. It is advantageous for you during the negotiation process.
- Caveat emptor is satisfied meaning the buyer has assumed the risk that a product may fail to meet expectations. The buyer has done their due diligence and cannot come back at a later time and claim there is a problem.
- As a buyer, you can be confident to make an intelligent choice. You don’t have to second-guess your decision to purchase a property if you’re well-informed.
- Any future expenses may be revealed that are not subject to negotiation -old windows.
- The report could be instrumental for price negotiation if the property turns out to have some issues that will require repairs and cost you money immediately. It ensures that you get the property at a reasonable price.
It is important to note building reports do NOT always determine value. Value is more related to the land to asset ratio -the land value increases where the building depreciates. The building report is a guide of potential risks and the repairs that are needed and is important due diligence.
Clearly, the building report has its own value that both sellers and buyers need for their ease of mind and protection.