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Property Inspection Reports: Reading and Acting on Findings

You’ve got your building and pest inspection report back. Now you need to understand what it means and how to use it in negotiation with the seller. Here’s a guide.

Reading the report:

Inspection reports are typically structured in sections: foundation, structure, roof, exterior, interior, plumbing, electrical, pest. Each section notes observations and flags issues.

Severity levels:

Good reports use severity language: “minor,” “moderate,” “major,” or “urgent.”

Minor: cosmetic wear, things that don’t affect function or longevity. Examples: minor paint wear, loose door handles, small drywall dents.

Moderate: things that should be fixed but aren’t critical. Examples: worn roof tiles (not leaking yet), old plumbing fixtures (still functional), aging weatherstripping.

Major: things affecting function or longevity. Examples: structural cracks, active termites, roof leaks, faulty wiring.

Urgent: safety hazards or critical failures. Examples: asbestos, active foundation movement, electrical hazards.

Red flags that warrant specialist inspection:

Structural cracks: get a structural engineer’s opinion (AUD 800–AUD 1,500) Termite damage: get a pest specialist’s follow-up (AUD 300–AUD 500) Electrical hazards: get an electrician’s assessment (AUD 200–AUD 400) Roof damage: get a roofer’s quote for repairs (AUD 500–AUD 2,000)

Don’t overreact to minor stuff, but take major findings seriously.

Negotiation strategy:

Once you have a report with findings, you typically have 7–14 days to respond (per standard contracts). Your options:

  1. Request price reduction: “The report shows AUD 12,000 in needed repairs. I’d like AUD 12,000 off the price.”

  2. Request seller fix: “Please fix the roof and paint issues before settlement.”

  3. Request funds held in escrow: “Hold AUD 10,000 in escrow, released once repairs are verified.”

  4. Proceed unconditionally: accept the issues and proceed at the agreed price.

  5. Walk away: terminate the contract (if you have a conditional offer).

Which to choose?

If the report shows major issues (structural, termites, electrical):

  • Definitely negotiate. A major issue is a material defect. You have leverage.

If the report shows moderate issues (roof tiles, plumbing fixtures):

  • Request a moderate price reduction. AUD 5,000–AUD 8,000 is reasonable for moderate issues.

If the report shows minor issues only:

  • You probably don’t have much negotiating power. Proceed with the purchase unless the minor issues are numerous and annoying.

Realistic example:

Report findings: old roof (needs replacement in 3–5 years, AUD 8,000 cost), single area of termite damage (AUD 2,000 repair cost), faulty electrical outlet (AUD 300 fix).

Severity: one major (termites), one moderate (roof), one minor (electrical).

Negotiation approach:

  • Request AUD 10,000 off the price (covers termite repair + partial roof contribution)
  • Seller might counter with AUD 6,000
  • You settle at AUD 8,000

This nets you AUD 8,000 toward repairs, and you’re happy to proceed.

When the report derails the deal:

If the report shows critical issues (structural failure, extensive termite damage, hazardous asbestos), you might decide to walk away entirely. The property is more expensive to fix than it’s worth.

If you included a “satisfactory report” condition in your contract, you can terminate without penalty. If you signed unconditional contracts, you’re stuck (unless you’re willing to forfeit your deposit and walk away).

This is why conditional contracts are essential.

Seller responses:

Some sellers dispute findings. They might:

  • Get their own inspection (sometimes valid; sometimes defensive)
  • Argue the issues aren’t as bad as reported (varies)
  • Refuse to budge on price (your leverage is gone)

If the seller refuses negotiation and you disagree with their position, you might walk away. The report is your negotiating leverage—use it.

Follow-up inspections:

If the report is concerning, get specialist inspections before finalizing negotiation:

  • Structural engineer: AUD 800–AUD 1,500
  • Pest specialist: AUD 300–AUD 500
  • Electrician: AUD 200–AUD 400

These cost money but give you clarity and stronger negotiating position. You can say, “Engineer confirms structural issue; we need a AUD 15,000 reduction.”

After settlement:

Once you own the property, building defects are your responsibility. The seller is off the hook. This is why negotiating upfront is critical.

If the roof needs AUD 8,000 in work and you didn’t negotiate a reduction, that’s AUD 8,000 out of your pocket post-settlement.

My take:

The building and pest inspection is your most important negotiating tool. Use it effectively to get issues addressed or priced into the deal. Never buy without it.

Read the report carefully, understand what’s major vs. minor, and negotiate proportionately. Don’t nickel-and-dime over minor stuff, but don’t let major issues slide.

And remember: once you own the property, it’s all on you.