Should You Arrange A Building Inspection Report Prior To Selling?

By Craig Lowe


Here is some fascinating data collated by the chief economist of the BNZ, Tony Alexander, from his latest Housing Market Update. This shows that close to 60% of residential property deals that do not proceed, collapse due to a failed building report:

What are the main reasons written sales fail to go unconditional?

Finance 31.2%
LIM Report 6.1%
Builders Report 57.8%
Earthquake/Insurance 3.9%
Can't sell own house 1.0%


A Building Inspection Report is a professional report detailing any major defects or maintenance issues a home may have. It is common for buyers to get this report done either prior to making an offer, or after an offer has been accepted as a 'condition' of the sale.  This allows them to withdraw from the deal if the Building Report is not favourable. To avoid this situation, many sellers are now choosing to have one of these reports made available, at their own cost, prior to going to the market.

Is this a good idea? Well clearly if your home is sound then the contents of a report should be of no concern, and providing evidence of this to buyers will be very helpful. What if you get a report done and it is unfavourable? Interestingly, and perhaps contrary to how owners may feel, it is actually a good thing if any potential fish hooks your home may have are found out early, well before it goes to market. Firstly, it is morally important that buyers are fully informed as to what they are buying; we would not want to sell a house for any amount of money if this were not the case. Secondly, if something is uncovered early it can often be dealt with quickly and fixed before sale. But even if the problem can't be fixed easily, it is still far better to know about it before the sales process starts.

If we simply let buyers know about an issue early, and that the house is being sold on an as-is basis, buyers are fully informed and happy to factor it in. It is the alternative situation which is the real disaster; if a buyer finds out about something wrong right at end of the process, it usually means you will lose the deal completely. This leaves you in a worse position than if you knew about the problem at the start; because now you know about it anyway, you must disclose this information to future potential buyers, and your property may have some stigma attached to it due to the deal crashing and no longer being fresh to the market.

While not essential, we feel that, on average, it is a very a positive thing to arrange a Building Inspection Report prior to taking your home to the market.


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