Buyers must understand the risks if they don’t carry out a building and pest inspection on the property they are buying. Inspections can reveal defects, allowing buyers to negotiate a purchase price reduction.

Key takeaways

• Once a contract has been signed, buyers should have the property inspected by a professional building and pest inspector to find out whether there are any defects or any pest-related damage at the property.
• Buyers should seek written quotations for the repair of any defects or to remedy pest-related damage.
• Most importantly, buyers should contact our Conveyancing team in Queensland so that we can assist in negotiating a price reduction for the buyer as compensation for the defects and damage.
• Buyers should pay particular attention to the date in the contract for the building and pest inspections to be carried out because if the buyer fails to act by that date, the seller is entitled to terminate the contract. Should the seller terminate the contract, the buyer is entitled to a refund of the deposit. However, the buyer will miss out on the purchase of the property.

Building and pest inspections

The Real Estate Institute of Queensland’s standard contract for houses (19th edition) contains a condition that the sale is subject to the buyer obtaining a satisfactory building and pest inspection report.

It is prudent for buyers to obtain a building and pest report(s) before the property contract becomes unconditional, as the contents of report can provide buyers with valuable information on the state of repair of the property and potential costs to remedy any defects or damage which may not be apparent to the naked eye.

The contract typically provides that, if the buyer is not satisfied with the results of the building and pest inspections, the buyer is entitled to terminate the contract of sale and recover the deposit in full. 

However, in practice, most buyers who obtain an unsatisfactory building and pest inspection report prefer to negotiate a reduced purchase price with the seller to reflect the likely repair costs.

Sellers are not obliged to reduce the price, but most negotiate, knowing they are likely to encounter the same issue with future buyers.

Once the buyer has received and read the building and pest inspection report, they should advise our Conveyancing team in Queensland if they are satisfied with the report outcomes. If not, they need to:

• Identify the precise issues of concern
• Obtain written quotations for the repair of the identified defects or damage and forward those quotations to us.

Once we receive this information, we can negotiate with the seller for an appropriate price reduction.

It’s critical that buyers are mindful of the fact that, should they fail to make a decision by the inspection date set out in the contract, then the seller is entitled to terminate the contract of sale and return the deposit to the buyer. 

Conclusion

In summary, property buyers should keep in mind the importance of a building and pest inspection and report. If the buyer elects to proceed with a purchase without such a report, it’s vital that they understand the related risks.