Renegotiating the price after a building inspection

You've found a home you want, agreed on a price, and then the building and pest report lands. There's a problem. Now you're trying to work out whether to ask for money off, get the seller to fix it, or reconsider the purchase.

Before you ring the agent, ring the inspector. Is it a major repair, normal wear and tear, or something they need to investigate further? Get that clear first. Then check your contract deadline with your solicitor so you know how much time you've got to negotiate.

One of our clients discovered rising damp in the property they wanted to buy and negotiated $10,000 off the price. That's a specific problem to take back to the seller, rather than just asking whether they'll take less.

But I'd still want to know what it would cost to fix. Getting $10,000 off doesn't tell you whether the repair will cost $5,000 or $20,000. Before you agree to a reduction, get someone qualified to explain the work and put a price on it.

And check where the repair money will come from. A lower purchase price can mean a smaller loan, so the discount may leave you with much less cash than you expect.

• Call the inspector to understand the defect and anything they could not inspect.
• Ask your solicitor to confirm the inspection deadline and your contract options.
• Support a price or repair request with the report and suitable quotes.
• Tell the lender about the defect and any agreed price change.
• Have the agreement documented before treating it as settled.

You made the offer based on the home you thought you were buying. If the report turns up a problem you couldn't see at the open home, it's reasonable to go back to the seller with that information and ask them to reconsider the price.

Start with the repair itself. Can you get it fixed, what will it cost, and do you still want the house once you know that? Then check the insurance and loan position. Getting a discount won't help much if you can't fund the work or the lender won't accept the property in its current condition.

A long report can look pretty alarming. Ask the inspector which findings need action, which need more investigation, and which are routine maintenance. I'd pay particular attention to these:

• Water damage: ask where the water is coming from and whether the quote deals with the cause as well as the visible damage.
• Structural concerns: get the right specialist to explain cracks, movement or roof problems before relying on a general repair allowance.
• Electrical faults: have a licensed electrician assess the issue. Don't assume a standard building report has tested all the wiring.
• Mould or pest damage: find out how far it extends, what treatment and repairs are needed, and what the inspector couldn't access.

In Queensland, check that the inspector holds the appropriate QBCC licence for the work. Ask about insurance, scope, exclusions and a sample report. Pest inspection work can require separate qualifications.

I'd also look closely at what the report didn't cover. Did they get into the roof cavity? Could they get under the house? If an area wasn't accessible, ask why and what needs to happen next. 'Not inspected' doesn't mean there's nothing wrong. Wiring, plumbing, asbestos or structural concerns may need a separate specialist.

When choosing an inspector, ask to see a sample report and find out whether they'll talk you through the findings. Get a written quote that says whether pest inspection and a return visit are included. I'd want clear answers about the property, rather than choosing someone just because they're the cheapest or have a thermal camera.

Give the agent something concrete to take to the seller: here's the problem, here's what the inspector found, and here's the quote to fix it. That makes your request much easier to explain than picking a round number and hoping they'll agree.

A quick phone estimate can help you decide whether to investigate further. For the negotiation itself, try to get a written quote from someone who's inspected the problem. You want to know what the price includes and what could still cost extra.

If it's a serious defect, get the relevant specialist involved before settling on a repair allowance. Send the details to your broker as well. We need to check whether the lender wants a new valuation or any repairs completed before it will lend.

You can speak to the agent yourself or have your conveyancer handle the request. Either way, expect a bit of back and forth. Keep your solicitor in the loop while you're waiting for the seller's answer.

I'd focus on the bigger issues. A leaking roof with a repair quote is a stronger reason to revisit the price than a list of chipped paint and little things you already noticed at the inspection. Our guide to negotiating with an agent covers how to put the request across.

Before using the possibility of walking away in a negotiation, find out whether your contract actually lets you do that. Your solicitor can check the inspection clause and the notice deadline.

You might prefer the seller to organise the repair before you move in. Fair enough, but get specific. Who's doing the work, when will it be finished, and who will check it? You don't want to arrive at the final inspection and find the job's only half done.

Use the inspector's findings to prioritise safety issues and substantial repairs. Ask the relevant specialist to assess concerns about structure, water damage, wiring, plumbing, pests or hazardous materials.

A standard visual report cannot confirm everything behind walls or finishes. If asbestos or lead paint is suspected, ask about specialist assessment before disturbing it.

Have your solicitor record the work, finish date, any reinspection and what happens if it's not done properly. 'The seller will sort it out' sounds reassuring on the phone. It still needs to become a written agreement you can rely on.

All right, you've agreed on a lower price. What actually happens now? The seller doesn't necessarily hand you the difference at settlement. Your solicitor needs to document the agreement, and your broker needs to check the revised loan.

Say you're buying for $800,000 and borrowing 80%, or $640,000. You negotiate $15,000 off and the lender keeps the loan at 80% of the new $785,000 price. The loan drops to $628,000. Your contribution towards the price falls by $3,000, before costs. You've got $3,000 more towards the repairs, not $15,000. That's why we check the cash left over as well as the new price.

A formal deed of variation can document the agreed lower price. Ask your solicitor whether this is the right approach and what it means for the duty assessment.

Duty does not automatically fall by reducing the price. In Queensland, dutiable value is generally the higher of the consideration and the property's unencumbered value, usually its market value. A higher market value can prevent the expected saving.

If QRO accepts a reduction in dutiable value from $1 million to $950,000, general duty falls from $38,025 to $35,775. That's $2,250 less, before allowing for any buyer concession. A concession can change those figures.

Have your solicitor compare the possible duty saving with the legal cost and arrange any assessment amendment. See our Queensland duty guide for the relevant buyer concessions.

A settlement credit can reduce what you pay the seller while leaving the duty bill unchanged.

In some cases, QRO will amend the duty assessment using solicitors' correspondence and a transfer document showing the lower price. But the property's market value can still keep the duty higher than you expect. Your solicitor needs to confirm the documents and accepted value before you count the saving.

Read QRO's guidance on contract variations and add the confirmed duty amount to your buying budget.

Send your broker the signed price variation or repair agreement and the defect details before settlement. Don't assume the original loan approval carries over unchanged. We'll check the lender's valuation, loan amount and any extra conditions; your solicitor handles the contract and duty.

The seller might say the problem's minor or that your quote is too high. Bring it back to the report and ask which part of the repair or cost they disagree with. Keep the conversation about the work, rather than getting drawn into an argument about everything you dislike about the house.

You could say: “The inspector found a roof leak. We've attached the report and 2 repair quotes, which range from $12,000 to $18,000. We'd like to reduce the price by $15,000 to allow for that work. Please send your response through our solicitor by [date].”

Use a response date your solicitor has checked against the contract. Asking for a discount doesn't stop the clock or replace any formal notice you need to give.

If you're still at the offer stage, first check whether the offer has become a binding contract. That changes your options.

Once you've signed, a bad report isn't an automatic exit. Your solicitor needs to check the inspection clause, any cooling-off rights and the steps you'd have to take to end the contract.

If the deadline's getting close and the seller hasn't answered, call your solicitor. Don't leave it until the agent gets back to you. Work out whether to seek an extension, proceed or use any termination right available under the contract.

Keep it short. Explain the problem, attach the relevant report and quotes, and say what you're asking for. If the inspector says something needs further investigation, use those words. Don't turn a possible issue into a confirmed defect. Keep the reply and final agreement in writing, with your solicitor handling any formal notices.

Subject: Request to review the price after building inspection

Dear [Agent/Seller’s Name],

The building inspection found [brief description of the defect]. I've attached the relevant findings and repair quotes.

The quoted repair cost is [$amount]. I'm requesting a price reduction of [$amount] to allow for that work.

Please respond through our solicitor by [date agreed with solicitor]. This request doesn't replace any formal notice required under the contract.

Kind regards,
[Your Name]

Cooling-off rights and a building-inspection condition are separate. Their deadlines, exceptions and notice requirements vary by state and contract. Auction purchases usually have different rules from private sales.

Get your solicitor to give you the actual dates and notice requirements. Keep the inspection deadline separate from any cooling-off deadline. 'There's still time' from the agent isn't enough to plan around. Our signed-contract guide explains the next steps.

The seller can say no. That's why I'd want to know my contract options before making the request, rather than finding out after the deadline has passed.