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Building and pest inspection: a broker's checklist

Every residential purchase should include a building and pest inspection before exchange (or, in an auction, before auction day). Many buyers commission the inspection, read the summary page, and miss the issues buried in the body. Here is how to read one without relying on the inspector’s verdict.

Split the two reports

You are paying for two separate inspections, usually bundled:

  • Building: structural integrity, roofing, plumbing, electrical compliance, waterproofing, major defects
  • Pest: active termites, termite activity history, susceptibility to future infestation

Building report: what to look for first

  1. Structural defects: cracks greater than 2mm in load-bearing walls, visible movement in footings, floor slope greater than 1:100. A single isolated 2mm crack is usually cosmetic; multiple parallel cracks are not.

  2. Water damage: mould in wet areas, rising damp stains on walls, ceiling stains around skylights or roof penetrations. Water damage is the most commonly under-reported and most expensive to rectify.

  3. Roof condition: age of metal roofing (over 25 years is worth replacing), tile condition, gutter alignment. The inspector’s photographs matter more than the text here.

  4. Electrical: the report should note whether the switchboard is modern (safety switches on all circuits) or outdated (ceramic fuses). Rewiring a 1960s house is $12k-$20k.

  5. Plumbing: pipe material (copper is fine; galvanised steel is end-of-life; polybutylene has known failure issues), hot water system age, evidence of leaks under sinks.

Pest report: the key question

Is there active termite activity? “No active termite evidence” is the reassuring answer. “Termite activity detected, treatment recommended” is a negotiable point. “Previous termite damage, not active” needs specialist assessment - what was damaged, has it been repaired properly, is the timber still structural?

Red flags that warrant specialist follow-up

  • Any reference to “further inspection recommended” - the general inspector has deferred to a specialist
  • Heritage properties with unclear conversion history
  • Properties with additions completed without council approval (the report may note “addition appears unapproved”)
  • Pools without current compliance certificate
  • Any reference to asbestos in sheeting, eaves, or pipes

How to use the report commercially

A building and pest report almost never comes back perfect. Use it to negotiate price, not to exit. For example: quote for rectification of a major issue ($15k-$25k) is a legitimate basis for re-negotiating $10k-$15k off the purchase price, or for the vendor to complete the repair before settlement.

Budget $600-$900 for the inspection itself. It is the best-value $700 you will spend in a $1M transaction.