An NZ homebuyer’s guide to builders’ reports

• What is a builder’s report?
• Why you should get a builder’s report
• What do these reports look for?
• How much do builder’s reports cost?
• When should you get a builder’s report?
• The actions you can take after receiving your builder’s report

When you’re buying a home in NZ, you’ll hear the words ‘due diligence’ thrown around a lot. This is particularly true if you’re looking to purchase your first property – your parents, mates and colleagues will likely all come out with horror stories about people who didn’t do their due diligence, and ended up in hot water.

When buying a home, due diligence is an umbrella term that essentially means taking proper care to ensure that the property you’re buying is in good condition, suits your needs and is appropriate for your budget.

One of the key components of doing your due diligence on a property is commissioning a builder’s report. But why is this important? What will a builder’s report tell you? And, when should you do it? Let’s take a look.

Sometimes also referred to as a builder’s inspection, these assessments of a property (should) involve an independent, professional builder review of the property to look for any structural or maintenance issue that you should be aware of.

Hopefully, from this description alone, you can see why these inspections are so important – you want to be informed when making what is likely to be one of the biggest purchases of your life.

However, if we haven’t convinced you yet., keep reading.

You’ve been to the open-home, you’re quite a handy person – surely you’d have noticed if there was something seriously wrong with the property you’re thinking of buying….

Yeah, nah.

Unless you yourself, or someone who saw the property with you are/is a qualified builder, and unless there was time to do a full and thorough check of every aspect of the home, you really don’t want to rely on gut instincts.

There are a number of things that can go quite seriously wrong if you don’t get a building inspection, and a problem crops up later on, and almost all of them involve you shelling out extra cash, which could have been avoided.

The most obvious problem, if you skimp on getting a builder’s report, is that you could end up with major repair works later on. For example, the cost of replacing a roof on an existing home can easily be around $20,000, according to Stuff. Problems like this would easily be picked up by a good builder, meaning you could then decide either to back out of the sale, or ask the vendor to lower the cost or do the repairs themselves.

As we’ll show in the next section, the problems that can be detected through a builder’s report might not be obvious, even if they’re very serious. For example, issues with the home’s foundations, which is a part of a property that most people don’t know what to look for, will be front of mind for a seasoned builder.

Some of the key elements of a property that will be covered in most builders’ reports in NZ include:

• Overall structural condition
• Foundations
• Subfloor/Basement
• Wall linings
• Windows and exterior cladding
• Moisture testing (particularly important if you suspect the property may be a “leaky building”)
• Roof and attic/roof space
• Spouting and drainpipes
• Floors
• Kitchen and bathroom fixtures
• Tiling
• Electrical
• Plumbing
• Water systems
• Water heaters /gas units
• Areas that need repair
• Retaining walls & Fences
• Driveways and exterior paving
• Decks
• Water tanks and septic systems
• Other buildings on the property (garages/carports etc)
• Insect and pest infestation (visible)
• Insulation

The exact timing of getting a building report will depend on the method of sale:

If buying at auction

If you’re buying a property at auction, you should get the building report before auction day, because your bid has to be unconditional.

If not buying at auction

In all other circumstances, the best bet is to make your offer conditional on a builder’s report. You do this by including a “builder’s report condition” into the sale and purchase agreement. This means you can back out of the sale if the builder’s report shows a serious problem with the home that you don’t want to deal with.

It’s quite common for sellers to commission their own builder’s report as they get ready to sell. However, we’d still highly recommend getting your own done – for peace of mind. This way you can ensure that the builder is truly independent, and isn’t the seller’s mate.

That said, it’s still worth asking to see a copy of any builder’s report that the seller has previously done. Remember, if the seller, or their real estate agent, already knows about problems with the home, they’re legally obliged to tell you about them.

Ultimately, it’s up to you. You have a few options if your builder’s report finds substantial issues with the property:

• Cancel the purchase: if you have this clause in your sale and purchase agreement, you’re able to pull the plug on buying the home.
• Discuss with the seller: depending on what you put into the sale and purchase agreement you might be able to negotiate with the seller based on what was found. For example, you could ask them to reduce the price, so you can get the repairs done, or you could ask them to foot the bill directly.
• Continue with the purchase: you could decide to go ahead with buying a home even if you know there are issues with it. While there’s nothing stopping you from doing this technically, it’s definitely a risky move.

Whatever you decide to do, you should let your lawyer know ASAP. Also bear in mind that, if you choose to cancel the agreement, the seller can ask you for a copy of the building report, and you’d likely be obliged to provide it.