It’s a common reaction when people see a list of defects in their building report, to simply walk away from the property. That’s not always necessary though.
Any existing home that is older than 10 years is likely to have a few issues, from peeling paint to mould. While there are some defects you should definitely walk away from (unless you’re an experienced carpenter or planning a knock-down re-build), many minor defects can be used as a negotiating tactic to bring the house price down.
Negotiating cost of repairs
Your inspection report will give you a list of all the defects in the house that may need repair work. Things like downgraded ceiling panels, poor electrical wiring, old plumbing, and even minor termite damage can all be repaired for a price. Your best bet in this area is to make some calls to contractors and get a few quotes for the repair work.
If, for example, you can show the wiring is a serious issue in the inspection report, and an electrician has quoted you $10,000 for rewiring, you have an argument for knocking $10,000 off the property price.
Stress of a bigger project
Getting one contractor in for repairs is one thing, but if you have multiple issues that need different contractors to repair, it starts becoming a big project. You can’t move in or get tenants until the work has been done, so you’re being put out further.
If these are all issues for you, they’ll be issues for any other buyer. They will also inconvenience the current owner should they wish to complete the repairs themselves before selling. So this is another area where you can negotiate on the price, for the amount of work it will take and the loss of income while you get the home to an acceptable condition.
Reducing price for further risks
Things like dampness (can be an indicator of mould), past termite activity or poor drainage are problems that can be dealt with to an extent, but there’s still the risk that these problems can rear their ugly heads again.
House prices can be brought down by identifying potential problems and you can push this point, using your inspection report as evidence of such risks.
When the house is in extremely poor condition
If the home you’re looking at is in a good location, but the inspection shows an awful lot of problems with the house, it still doesn’t necessarily have to mean the end of your interest.
Do some research into knock-down & re-builds. If you can get the property price down low enough, it may well be in your interest to knock the old house down and build a new one.
If you end up with a brand new, fault & defect free home in the location that you want, it may be worth the hassle.
It’s really up to you to do the math for your current situation.
If you’re looking for a new home and you want to have better negotiating power, one of our experienced inspectors will do a full check of the property and have a detailed report for you within 48 hours.