What to Look for During a Property Inspection
A thorough property inspection protects you from buying a home with costly hidden problems. Focus on structural integrity, water damage, pest activity, and any signs that major systems need replacement or repair.
Consider a buyer who fell in love with a renovated terrace in Newtown. The updated kitchen and bathroom looked flawless, but during the building inspection, the inspector found significant timber rot in the rear extension and poor waterproofing around the bathroom that had already started to damage the subfloor. The repair quote came back at $32,000. The buyer used that report to renegotiate the price down by $28,000 and factored the remaining cost into their loan structure. Without the inspection, they would have faced that bill within months of moving in.
When you attend an open inspection or private viewing, bring a torch, a marble or spirit level, and a notepad. Check for cracks wider than a few millimetres, especially around door frames and in brick or rendered walls. Open and close every window and door to see if they stick or won't latch properly. Turn on taps and flush toilets to test water pressure and drainage. Look under sinks and inside cupboards for water stains or dampness. Walk across floors to feel for soft spots or excessive bounce, which can indicate structural issues or termite damage.
Pay attention to the roof, gutters, and downpipes from ground level. Missing tiles, rusted gutters, or pooling water around the foundation can signal drainage problems. If the property has a basement, garage, or underfloor access, ask to see it. Damp smells, visible mould, or white powder on brickwork all point to moisture problems that will cost thousands to fix.
Building and Pest Inspections Are Separate Reports
A building inspection assesses the structural condition of the property, while a pest inspection looks for termites, borers, and other timber pests. You need both, and they are usually conducted by different inspectors or as separate reports from the same company.
The building report will identify major defects such as foundation movement, roof damage, structural cracks, faulty drainage, and any unsafe electrical or plumbing work. It will also flag minor defects and areas that need maintenance. The pest report will tell you if there is active termite activity, evidence of past infestations, or conditions that make the property vulnerable to pests in the future.
In Sydney, where many homes are older timber construction or have timber flooring, pest inspections are critical. Termite damage can compromise structural integrity and cost tens of thousands to repair. If the pest report finds active termites, you can negotiate for the seller to treat the property before settlement or reduce the price to cover treatment and repairs.
Book both inspections as soon as your offer is accepted and before you exchange contracts. Most inspection companies in Sydney can complete both within a few days. Expect to pay between $400 and $700 for a combined building and pest inspection depending on the size and age of the property.
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Strata Reports for Apartments and Townhouses
If you are buying an apartment, townhouse, or any property in a strata scheme, order a strata report. The strata report shows the financial health of the owners corporation, any planned major works, past and current disputes, and whether levies are likely to increase.
Look at the sinking fund balance and compare it to any planned capital works. If the building needs roof repairs, lift replacement, or facade work and the sinking fund does not have enough money, a special levy will be raised, and you will be liable for your share after settlement. Special levies can run into thousands or even tens of thousands of dollars per unit.
Check the levy payment history to see if other owners are in arrears. Widespread unpaid levies can signal financial problems within the scheme. Read through the meeting minutes for the past 12 months. Recurring complaints about noise, parking, or maintenance can point to deeper management issues or a lack of funds to fix problems.
In inner Sydney strata buildings, including older blocks in suburbs like Surry Hills and Potts Point, you may also find restrictions on pets, short-term rentals, or renovations. These by-laws are legally binding, so confirm they align with how you plan to use the property. If you intend to rent out the property later or own a dog, check the strata by-laws before signing.
Council Records and Planning Restrictions
Search council records to confirm the property complies with planning and building approvals. If the seller has done renovations, extensions, or structural changes, ask for copies of development approvals and occupation certificates. Work completed without approval can affect your ability to sell or refinance later, and the council can issue orders to remove or rectify unapproved work.
You can request a Section 10.7 planning certificate from the local council. This certificate shows zoning, any development applications on or near the property, contaminated land records, and whether the property is affected by things like heritage listings, tree preservation orders, or coastal erosion zones. In Sydney, properties near the harbour or in heritage conservation areas often have additional restrictions that limit what you can do with the land.
If a property is listed as flood-prone or bushfire-prone on the certificate, it will affect your insurance costs and may limit your ability to make certain improvements. Some lenders also apply stricter lending criteria to properties in high-risk zones.
What to Do If the Inspection Report Reveals Problems
If your building or pest report uncovers significant defects, you have several options. You can ask the seller to fix the issues before settlement, negotiate a price reduction to cover repair costs, or walk away if the problems are too severe or expensive to fix.
Most contracts in New South Wales include a building and pest clause that allows you to withdraw from the purchase if the inspection reveals major defects. The clause usually defines what counts as a major defect and gives you a set number of days to complete inspections and notify the seller if you want to pull out. Read your contract carefully and discuss any defects with your solicitor or conveyancer before making a decision.
If you choose to proceed and negotiate a price reduction, get written quotes from licensed tradespeople for the repair work. Use those quotes as evidence when you ask the seller to adjust the price. Some buyers prefer a price reduction over having the seller arrange repairs, as it gives them control over who does the work and the quality of materials used.
Attend the Inspection and Ask Questions
Always attend the building and pest inspections in person if the inspector allows it. Most inspectors are happy to have buyers present, and it gives you a chance to see problems firsthand and ask questions as they work.
Ask the inspector to show you anything they flag in the report. If they identify a crack or a damp patch, have them explain whether it is cosmetic or structural. Ask about realistic repair costs and whether the issue is likely to get worse if left untreated. If the inspector mentions something is near the end of its useful life, such as a hot water system or roof, ask how long you have before it needs replacing and what a replacement typically costs.
Bring your contract or offer documents with you and check that the inspector is assessing everything included in the sale. If the property includes a shed, carport, or separate studio, make sure those structures are inspected as well.
Pre-Approval and Loan Conditions Based on Inspection Results
Most lenders issue pre-approval based on your financial situation, but final loan approval is conditional on a satisfactory property valuation. If your building inspection reveals major structural issues, the lender's valuer may reduce the property's assessed value or flag it as unsuitable security.
If the valuation comes in lower than the purchase price, you will need to increase your deposit to cover the difference or renegotiate the price with the seller. Some lenders will not lend at all on properties with active termite infestations or significant structural defects until the issues are fixed and re-inspected.
If you are using a low deposit option such as the Australian Government 5% Deposit Scheme, the property must meet minimum standards. Lenders and Housing Australia may decline properties that require immediate major repairs or that pose a safety risk. Discuss any inspection findings with your mortgage broker before proceeding. At No Deposit Loans, we can review your inspection report and talk through your options, including whether the property is still a sound purchase or if you should walk away and keep looking.
If you are ready to move forward with a property or want to talk through what to look for during inspections, call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Do I need both a building inspection and a pest inspection?
Yes, you need both. A building inspection assesses structural condition and defects, while a pest inspection checks for termites and other timber pests. They are separate reports and usually conducted by different inspectors or as distinct reports from the same company.
What does a strata report show?
A strata report shows the financial health of the owners corporation, sinking fund balance, planned major works, past disputes, levy payment history, and strata by-laws. It helps you understand whether special levies are likely and if there are restrictions on pets, renovations, or short-term rentals.
Can I pull out of a purchase if the inspection finds major defects?
Most contracts in New South Wales include a building and pest clause that allows you to withdraw if the inspection reveals major defects. The clause sets out what counts as a major defect and gives you a set period to notify the seller if you want to pull out.
Will my lender approve a loan if the building inspection finds problems?
It depends on the severity. Lenders may reduce the valuation or decline the loan if there are active termites or significant structural defects. If the valuation comes in lower than the purchase price, you will need to increase your deposit or renegotiate.
What should I look for during an open inspection before ordering a formal report?
Check for wide cracks, doors and windows that stick, water stains under sinks, soft or bouncing floors, damp smells, and roof or gutter damage. Test taps and drainage. These signs can indicate structural, moisture, or pest problems that warrant a formal inspection.
