Why Pest & Building Reports Are Your Secret Weapon for Property Negotiation

Why Pest & Building Reports Are Your Secret Weapon for Property Negotiation

Buying property can be thrilling, but it often comes with the stress of receiving a detailed pest and building report-sometimes 50-80 pages long-highlighting every flaw in your potential dream home or investment. Even brand-new properties often generate lengthy reports, causing unnecessary panic among buyers.

In this episode, Casey Taylor breaks down what these reports actually mean and how to interpret them. Learn the key differences between "major" and "minor" defects according to Australian standards and why neither should send you running. From bathroom moisture issues to common building cracks, Casey explains which findings are easy to fix and which ones require serious attention.

Gain valuable negotiation tips on how to address defects with selling agents and secure price reductions. Casey reveals a proven strategy for negotiating discounts that often exceed the cost of repairs. You'll also learn about termite risk assessments and why moderate-to-high ratings are common without signaling an immediate concern.

Whether you're a first-time homebuyer or a seasoned investor, this practical guide will turn intimidating inspection reports into powerful negotiation tools.

 Don't miss out on insider strategies that could save you thousands. 

Chapters

• 0:00 Introduction to Pest & Building Reports
• 1:37 Understanding Major & Minor Defects
• 4:33 Common Major Building Issues
• 6:40 Typical Minor Defects to Expect
• 9:15 Effective Negotiation Strategies
• 11:23 Termite Risk Assessment
• 12:35 Final Thoughts & Recommendations

Transcript

Speaker 1: 0:00

Welcome back to another episode of the Taylor Property Wealth Podcast. My name is Casey Taylor and in today's episode we're going to be talking about pest and building reports, what to expect in a pest and building report and really breaking down what that looks like. Because for the average person out there that doesn't purchase property often and then gets a pest and building report, it is quite daunting to get this report that can be 50, 60, 70, 80 pages long and it's literally telling you everything that is wrong with the property that you're purchasing. Whether the property is one year old, whether it's 20 years old or 40 years old, there are going to be things that come up in this report. So you really need to have the mindset to expect things to come up. And then some of those things in the report sound a lot worse than they are in reality, or some of them are defined in a certain way that can be easily resolved, and it's more what can happen in the future if you don't resolve these issues.

Speaker 1: 1:04

So let's get into it today, because I think this one's going to be very valuable for purchasers out there when they're getting that pest and building report completed. So when we get a report done, we're obviously seeking that out from a pest and building company individual inspector. We're going to book that in once you've got that property under contract. Sometimes it's going to be before an auction, for example, because you want to do your due diligence prior to purchasing that property and they're going to complete an inspection and go through that property. It's probably going to take an hour, hour and a half roughly and then they're going to compile a report based off that and, as I mentioned prior, those reports can be like 40 to 80 pages long, if not just a little bit more. So when you get that report and there's a lot through it you can naturally freak out if you haven't seen one before. There's a lot of common things in those that do come up. There's obviously going to be different bits and pieces subjective to each property, right, but if you can understand some of the common things you see and then understand how much it costs to fix those and then use those as a negotiating tool, it's really not as scary as it looks, so don't let these reports cripple you, okay? So when you get that report back, there's going to be a couple of commonalities between whoever you use. Some are going to be a lot easier to digest than others as well. So when you're seeking out someone to complete a report, ask for an example of the report that they provide to their clients. Is it digestible or is it going to be 80 pages of just waffle that you can't understand? So that is really important. When you're doing your due diligence, that you can't understand. So that is really important. When you're doing your due diligence, that report is going to include a list of majors and minor defects and it's actually going to rate those, whether it be below average, average, typical or above average for each of those major and minors. So it could mean that the majors on the property are considered below average or average and then the minors are considered potentially above average or typical. So you can start to get an understanding how they compare to other properties of similar build types and similar ages.

Speaker 1: 3:19

Now, the definition of a major defect under the Australian standard is a defect in a major element of a building due to defective design, workmanship, materials or failure to comply with the National Construction Code, and this is the potential to cause a building to be uninhabitable, unsafe or a risk of collapse. Okay, so that's the definition and that's what everyone, as an inspector has to abide by as the Australian standards. A defect that is minor, doesn't comprise the building structural integrity or pose an immediate safety risk, but may be a functional or an appearance, meaning cosmetic. So from that you can understand what the major and what the minor is. A lot of the minor stuff is easily resolved and some of it that might show up in the report you don't even actually need to resolve, but they're just highlighting that that is there and some of these things you might just do down the track. So when we're getting majors completed and they're coming up in a report, some of the common ones that we see are moisture readings in the bathrooms or the adjacent walls to the bathrooms.

Speaker 1: 4:33

It could be a reseal, regrout issue. It could be something a little bit more sinister, but if you're purchasing a 10-year-old property, the likelihood that it does need a reseal, a regrout or something a little bit more. That is not uncommon, so don't freak out over that one. As long as you go out there and proactively resolve that issue moving forward, then it's not a big drama. If you leave it and it's causing moisture for years and years, then it can start to cause cause dramas. And another thing which we'll get to in the report is it would then be susceptible to termites.

Speaker 1: 5:12

Another one and this is definitely more specific to Queensland is fences. Fences come up in reports a lot. They're on a lean poles are loose, different bits and pieces. Queensland we see a lot of timber fencing. So that is something as a major that's going to come up a lot of the time. It comes up as a major because there's that safety element. The fence falls on a kid. The inspector is going to put it in as a major to cover themselves.

Speaker 1: 5:38

Retaining walls is another one. There can be structural issues with some retaining walls. It might not be super sinister but it's another one we see a lot. And then we see cracks to plaster and masonry. Buildings move. You can buy, you can buy, build and it's a year old and can have cracks. But you need to understand how many millimeters, how, how big they are. But to purchase a property and think it's never going to have cracks is inevitable. It's going to move right.

Speaker 1: 6:10

Some of the common minor defects that we see is drainage down pipes cracked, being hit by a lawnmower, whippersnapper, or they've just I guess they're rusted a little bit so they're not draining the way that they should susceptible to termites due to moisture, fungal decay around it could be on some retaining walls, some fences, some timber around the eaves, whatever that looks like. Retaining walls can again come up as a minor as well, depending upon how much damage there is, what it looks like. Reseal and regrout of kitchens and bathrooms this one is a pretty easy resolution. If it's just a reseal, for example, or a regrout, it's not going to be a massive amount of money. But again, we want to fix it because we don't want those leaks, that moisture to continue to build up and damage other things and decay over time. Down pipes not diverting away from the property correctly that's a pretty common one. We see. Need to divert it away more or just connect it up to some stormwater Aircon unit overflow that's another one that's pretty common that you see. We just want to divert it, get it into the stormwater, reduce that moisture, get it properly drained.

Speaker 1: 7:23

Cracks to masonry or the plaster that again we spoke about as major it can be sometimes just a minor as well. Some movement to plaster, whatever that may be, pain as well. Places get dinged up, especially if they've been an owner occupied for a long period of time or even a tenant. It can be that little bit of wear and tear and they just haven't haven't completed that. Sometimes it's touch up or sometimes great opportunity to paint, freshen the place up door latches in alignment of doors and that can be because of some of that movement as well. Okay, so there's some pretty common things to expect when you're completing your report from a building point of view.

Speaker 1: 8:03

Now, if these things come up in a report and you are very confident in how you negotiate, you can go back and position this with the agent. And it's very strategical when you bring these things up. If you bring them up before going under contract, he's the, the agent. He or she is going to say well, you spoke about those and you you purchased it, as is. So keep you, keep your cards close, don't mention some of the things you notice and wait until the pest and building picks them up and then you can raise them, see if you can work to have some of those things rectified.

Speaker 1: 8:35

Or the other option is a price reduction. We a lot of the times go in and we try and negotiate for things to be fixed, but some vendors, they are happy to take a price reduction and we position it. Hey, these are things that need fixed, we'd prefer them just to be fixed. However, if your vendor would prefer a price reduction, happy to discuss that. We find that that's an easy way to get the price reduction and it's just coming in a softer way and almost allowing the vendor to make the decision on the price reduction. So we're not just coming straight in and saying, hey, we want x amount off. So that's just a way we position things when we're negotiating using a pest and building. A lot of the time when we negotiate we actually get more price reduction off than what the work's going to cost as well, which is always positive, and it just means client has a little bit of cash left over and if anything comes up in the future, you've got some cash there to use it on.

Speaker 1: 9:30

From a pest point of view, and some of the things from the build I kind of touched on lead into the pest report as well because that can, I guess, give us our risk levels on termites. So one of the things that pest report is going to identify is were termites found simple yes or no? Was there past termite damage found, yes or no? You can definitely see. Sometimes there's been past damage and they've been treated. You might see a durable notice which is a chemical barrier. Now that could be current and you would normally see that within your electricity box. It will have the dates when that was last completed. Is it in date, is it not? Sometimes we see that the chemical chemical barrow is actually installed when the build takes place as well, so it might mean that there weren't termites, but they had one installed when it was built. That all just depends upon area, so that's something you also want to take a look at.

Speaker 1: 10:37

Now. They're going to assess timber fungal decay rot. Is it rated low, moderate, high? Typically, you're going to see some fungal decay with timber around, especially if the property is 10, 15 years old. It's inevitable. Now, when we're looking at those high moisture readings that can lead into the potential high risk of termites. I would say it's very common to see the risk of termites being from moderate to very high and that's simply just with some of those moisture that present the drainage, all those little bits and pieces lead to the risk of termites being higher.

Speaker 1: 11:19

So if you can resolve some of those things from the build perspective, it's going to lower that risk from the termite being present and as an investor, you want to go out and you want a timber report done every 12 months, just to be proactive. It's a couple of hundred dollars, it's peace of mind and it stops things happening and progressing a lot further. It is scary when you take a look at it and you don't look at these every day. You don't want to let this scare you off, because sometimes we talk to clients and it's like, well, let's just move on to the next one. It's like, well, these things in this report are quite standard for a property in this area of this build. So if we move on to another property, a lot of these things might come up again. So it's not uncommon. It's just some of those things that you might look at and they are uncommon and then that might be a deal breaker.

Speaker 1: 12:16

So it's really understanding the reports, understanding what some of these defects mean for the future and how easily they can be resolved, because they can be a major defect but they can be very easily resolved as well.

Speaker 1: 12:31

So it's really having that experience and that understanding to find the solutions, to be able to use that as a tool, get things wrapped up, get things fixed to bring it up to where it needs to be, or that price reduction to put towards getting things up to where it needs to be. Okay, I hope this one's been valuable. I'm sure it is if you're going out there and looking to purchase, because pest and building reports are something you should be putting in every single contract subject to a pest and building reports are something you should be putting in every single contract subject to a pest and building report. So if anything does come up, you have the opportunity to pull out of the contract, terminate the contract using the pest and building report. It's something we put in all our contracts, so it's it's an important one. Thanks for listening, guys. Hope you enjoyed and we'll see you on the next one.