You are buying a home, employed a building inspector to prepare a home inspection report and now have the resulting inspection report in your hands. Invariably the report will list a number of defects.

What Next?

As a buyer, what is your next step?

A reliable building inspection report, one prepared in accordance with Australian Standards AS 4939.1, will not only identify faults it will categorize those defects and indicate their level of significance. A report prepared with integrity will also make recommendations on how defects should be treated and will compare those defects found with other similar homes, including homes of similar construction types and styles, homes built in similar environs and homes of similar age.

If you are not sure of the inspection report’s recommendations your first step is to speak with your building inspector and seek clarification of issues you do not understand. If it is possible it may pay you to attend on the last half hour of the inspection so that you can see first hand the issues being identified in the home inspection report. Be sure you understand issues raised in the home inspection report that reflect safety concerns, and defects that have a potential of high repair costs (whether now or in the future).

Once you know and understand the facts you are in a position where you can make a purchasing decision; a qualified decision in that you are buying a property with a level of knowledge you did not have before receiving the home inspection report.

The decision is yours and yours alone.

The inspector should not be responsible for making the decision for you and the inspector should not give an opinion as to whether or not you should make the purchase. That is not the job of the building inspector.

Professional Home Inspection reports are prepared by independent building inspectors qualified to identify and observe on faults and should not be used as a tool by buyers who commission a report to influence the purchase price.

It is important for buyers to remember that all homes have defects, even newly built homes. And similar homes (as noted above) have similar defects. Simply speaking, buyers who have concerns with particular types of faults should avoid looking at similar homes.
Now you know what you need to know and you want to buy the home. If you don’t, walk away. Money well spent.

That means its time to get back to the seller. You have choices:

  1. You can accept that there was always going to be defects whether major or minor and that houses of similar styles and types are likely to have similar issues. You are therefore happy to negotiate as you would have without this information comforted by the fact that you can address these issues once you have possession of the home and/or that you can live with the defects.
  1. The defect adversely affects the value of the home, such as situations that present as a safety issue or is a significant structural issue. If the inspection report was commissioned prior to signing a contract of sale or you conditioned your offer on a home inspection you may have justification for negotiating the offer. If the inspection was carried out during the cooling off period you have two choices. You can accept the faults or you can withdraw from the contract. I would suggest you seek legal advice before taking the latter action.
  1. Having independent advice and having a shopping list of defects you can negotiate the price. Do not however expect the seller to respond favourably. Lets face it the seller probably thinks their home is perfect. Whether they knew the defect existed or not they lived with it, possibly for many years. While some sellers will respond favourably and will even fix reported defects, more than likely they will not respond in your favour simply because you have a report.

The seller has a decision to make as to how to respond, whether to ignore your observations, to offer to have some or all defects corrected or to accept a reduced sale price.

My recommendation when negotiating with the seller is to be fair and to treat the seller with respect. Chances are, if you are buying a home you are also selling (unless you are a first home buyer), meaning the roles will be reversed when you negotiate the sale of your home. If the deal you got is a good deal, don’t beat the poor seller up any more, accept it.

Be prepared to listen to the Real Estate Agent during any negotiation. A professional agent will treat you with respect and give what they believe is appropriate advice. Remember that they will be keen to act as your agent as you try to sell your home, or when you find you want to sell this home sometime in the future.

Having said that, be prepared to walk away if you are not able to negotiate what you believe to be a fair deal.