Top Strategies to Inspect Property as a First Home Buyer

What a Property Inspection Actually Tells You

A property inspection gives you evidence to make an informed decision about whether to proceed with your purchase, negotiate on price, or walk away. It reveals the current condition of the property, highlights immediate and future maintenance costs, and identifies structural or safety issues that could affect your finances or ability to secure finance.

Consider a buyer looking at a weatherboard home in Footscray who fell in love with the character features and period detail. During their pre-purchase inspection, the building inspector found rising damp in two bedrooms, outdated electrical wiring, and stumps that needed replacement within two years. The estimated repair cost was around $35,000. The buyer used this report to negotiate a $30,000 price reduction and factored the remaining work into their renovation budget before proceeding. Without that inspection, they would have faced unexpected costs within months of settlement and may have struggled to apply for a home loan with sufficient borrowing capacity to cover both the purchase and repairs.

This is particularly relevant for first home buyers who often have limited cash reserves after meeting deposit and settlement costs. Unexpected repairs can derail your budget or force you to take on additional debt at a time when your finances are already stretched.

When to Book Your Building and Pest Inspection

Book your building and pest inspection as soon as your offer is accepted and before the cooling-off period ends, or immediately after your contract goes unconditional if you waived the cooling-off period.

Most contracts in Victoria include a building inspection clause that allows you to withdraw or renegotiate if the report uncovers significant defects. If you are buying at auction or waiving conditions to secure the property, arrange a pre-auction inspection so you know what you are committing to before you sign. Some buyers attend open inspections with a builder or inspector to get an initial sense of the property's condition, then follow up with a formal report once their offer is accepted.

In our experience, buyers who book their inspection within 24 to 48 hours of offer acceptance avoid delays and give themselves enough time to review the report, seek quotes for repairs, and decide whether to proceed. Waiting until the last days of your cooling-off period leaves little room to act on the findings.

What a Building Inspector Will Check

A building inspector examines the structure, roof, walls, floors, plumbing, electrical systems, drainage, and any visible signs of water damage, pest activity, or structural movement.

They do not open walls or lift floorboards, so their assessment is based on what is visible and accessible at the time of inspection. The report will typically categorise issues as minor, moderate, or major, and provide recommendations for further investigation or immediate repair. Major issues might include foundation cracks, roof leaks, or faulty wiring. Moderate issues could be rusted gutters, damaged tiles, or inadequate ventilation. Minor issues are cosmetic and unlikely to affect the property's value or your ability to secure finance.

Your lender may request a copy of the building report, particularly if you are using a low deposit option such as the First Home Guarantee and the property is older or in need of repair. If the report identifies structural concerns, the lender may require a more detailed assessment from a structural engineer before approving your loan.

How to Interpret the Report and What to Do Next

Read the report carefully and focus on the sections marked as major or requiring urgent attention, then get quotes from licensed tradespeople to understand the actual cost of repairs.

If the total repair cost is significant, you have three options: negotiate a price reduction with the vendor, ask the vendor to complete the repairs before settlement, or walk away if the cost outweighs the property's value to you. In a scenario where a buyer found asbestos in the eaves and a leaking shower membrane during their inspection of a unit in Preston, the repair quotes totalled $18,000. The buyer's conveyancer sent the report and quotes to the vendor's agent and negotiated a $15,000 price reduction. The buyer proceeded with the purchase, completed the asbestos removal immediately after settlement, and scheduled the bathroom repairs for the following year. They had already factored contingency funds into their budget after speaking with their mortgage broker, so the reduction brought the property back within their comfortable borrowing range.

If you are purchasing with a low deposit, additional repair costs may push your loan-to-value ratio higher or reduce your borrowing capacity. Speak with your broker before committing to repairs that require additional borrowing, as this can affect your home loan application and may mean you need to adjust your offer or look at alternative properties.

What a Pest Inspection Covers and Why It Matters

A pest inspection identifies termite activity, timber damage, conditions conducive to infestation, and other wood-boring pests that can compromise the structure of the home.

Termites are common in Melbourne's older suburbs, particularly in properties with timber frames, subfloor areas with poor ventilation, or garden beds built up against external walls. The inspection will note any live activity, previous damage, and risk factors such as moisture, timber-to-ground contact, or untreated timbers. If termites are found, you will need a quote from a licensed pest controller for treatment and repair, which can range from a few thousand dollars for localised damage to tens of thousands if the infestation is widespread.

Lenders take termite damage seriously. If the pest report indicates active infestation or structural damage, your lender may delay approval until you provide evidence that the issue has been treated and the timber repaired or replaced. This can push out your settlement date or require you to renegotiate terms with the vendor.

Attending the Inspection in Person

Attend the inspection in person so you can ask questions, see the issues firsthand, and get a feel for the property beyond what appears in the written report.

Most inspectors are happy to walk you through their findings as they go and explain what is normal wear and tear versus what requires attention. You can take photos, ask about the lifespan of major items like the hot water system or roof, and get a sense of upcoming maintenance costs. This is also your opportunity to ask about any concerns you noticed during your initial viewing, such as cracks, stains, or unusual odours.

If you cannot attend, ask the inspector to call you after the inspection to talk through the key findings before the written report is issued. This gives you a head start on deciding your next steps and avoids delays in responding to the vendor.

When to Call in a Specialist

If the building or pest report flags something that requires further investigation, such as structural movement, roof framing concerns, or electrical hazards, arrange a follow-up inspection with a structural engineer, electrician, or plumber before you proceed.

The cost of a specialist report is typically a few hundred dollars and can save you from taking on a property with hidden issues that would cost tens of thousands to rectify. Your lender may also require a specialist report if the building inspection raises concerns about the property's structural integrity or safety. This is common for older homes, properties with extensions or renovations, or homes in areas prone to subsidence or flooding.

If you are purchasing in an area where flooding or drainage is a known issue, ask your inspector whether a drainage or stormwater assessment would be worthwhile. Properties in low-lying areas near Merri Creek or the Maribyrnong River, for example, may have drainage systems that are inadequate for heavy rain, leading to water pooling under the house or around the foundation.

Red Flags That Should Make You Reconsider

Walk away or renegotiate hard if the report identifies structural cracking, active termite infestation with widespread damage, major roof or plumbing failure, asbestos in poor condition, or electrical systems that pose a safety risk.

These issues are expensive to fix, can delay settlement, and may affect your ability to secure finance or insurance. If the vendor is unwilling to reduce the price or address the issues before settlement, it is usually a sign that the property is not worth the risk. Some buyers, particularly those using low deposit schemes or first home buyer grants, have limited financial buffer and cannot afford to take on a property that requires immediate and costly repairs.

If you are uncertain whether an issue is a dealbreaker, speak with your mortgage broker and conveyancer before making a decision. They can help you understand the financial and legal implications and whether the property still represents good value once repair costs are factored in.

How Inspection Findings Affect Your Loan Approval

Your lender will want to see the building and pest reports, particularly if you are borrowing more than 80% of the property's value or using a government scheme that requires the property to meet minimum standards.

If the report shows major defects or safety issues, the lender may request a valuation review, require repairs to be completed before settlement, or reduce the amount they are willing to lend. In some cases, the lender may decline the application altogether if the property is deemed unsuitable security. This is more common with properties that have structural issues, unresolved pest damage, or non-compliant building work.

If your loan is subject to valuation and the property is in poor condition, the valuer may assess it below the purchase price, which can reduce your borrowing capacity and require you to increase your deposit or renegotiate the price. Speak with your broker as soon as you receive the inspection report so they can liaise with the lender and manage any issues before they delay your settlement.

Call one of our team or book an appointment at a time that works for you to talk through your inspection findings, understand how they affect your borrowing capacity, and make sure your home loan application stays on course.

Frequently Asked Questions