Builder’s report quandary - to buy or not to buy?

BUILDING REPORTS have become a staple for prospective buyers who don’t want their dream home to turn into a money pit.

But they cost hundreds of dollars and it’s tempting to rely on the inspection reports some vendors provide as part of their marketing information packs to expedite a sale.

They believe providing a Land Information Memorandum (LIM) from the local council and a building inspection report can help busy people get an offer on the table.

The Real Estate Authority says this is great in theory, but buyers still need to tread carefully.

It recommends potential buyers check when a LIM for the property was prepared.

A LIM summarises the latest property information held by the different departments at a council at the time.

It contains details of council consents for any work done, how much the rates are and information on any geographic hazards that might have an impact on the property, such as subsidence.

Much of this information can be general. The LIM for most houses in Wellington, for instance, will say that they’re in a high wind area.

If the LIM is dated within a couple of weeks of receipt, it’s safe to assume it’s up to date, the REA says; if it’s dated a year ago, make further enquiries.

Obtain your own LIM - prices vary from council to council - and also ask to see the property file held by the council, which holds other information about a property, like a site map and original house plans.

Using a building report provided by the seller or their real estate agent may seem appealing because it’s instant and costs nothing.

But if you buy the property and find it needs costly repairs, you’re not protected by the building report because the inspector’s contract is with the seller, the buyer.

The REA recommends using an accredited property inspector who complies with the New Zealand building inspection standard 4306:2005.

Their written report will identify any current defects as well as highlight any urgent and long-term maintenance.

The REA advises engaging an inspector with a good level of indemnity insurance, as this will protect buyers who find they need to fix something in their new home that wasn’t in the report.

“Building inspections do come at a cost, but we think it’s worth it to be sure that you’re fully aware of what you’re signing up for,” the REA says.

Depending on the age of the house, don’t necessarily expect a thin report saying there are no issues.

Because many wooden houses in New Zealand are more than 50 years old, there will be things the inspector needs to point out.

But don’t confuse normal agerelated matters that may not be major issues with significant repairs needed in the short term.

If a report doesn’t make these distinctions, ask the inspector about the difference.

“If you end up with a report with a lot of information about the property it doesn’t mean you should walk away,” the REA says.

“Instead, see it as giving you the opportunity to know what you’re buying.

“Doing this before you make an offer means you are fully aware of what the property may need to have done to it and your offer figure can reflect that.”

Buyers who don’t feel comfortable paying for a building report before making an offer can include a property inspection as a condition of the sale.

For independent guidance and information on buying or selling, check out settled.govt.nz.