When a Property Does Not Pass a Builder's Report: Your Options

Getting a builder's report back with a long list of concerns is one of the more unsettling moments in the property-buying process. Many buyers are unsure what to do when a report raises significant issues, and some walk away from properties that could have been negotiated or managed with the right approach. At Chaperone, we believe informed buyers make better decisions, and understanding your options when a builder's report raises red flags is an important part of that.

Understanding What the Report Is Telling You

Not all issues identified in a builder's report carry the same weight. Experienced building inspectors typically categorise findings into immediate safety concerns, structural defects, maintenance items, and general observations. A report noting that a tap washer needs replacing is very different from one flagging moisture damage to floor joists or a non-compliant structure. Before reacting to a long list of items, it is worth speaking with the inspector directly to understand which findings are urgent, which are cosmetic, and which represent genuine material risk. Many buyers find this conversation reassuring because it puts the findings in perspective.

Option 1: Negotiate a Price Reduction

If the report reveals material defects that were not apparent during your initial inspection, you may have grounds to renegotiate the purchase price. The cost of remedying the identified issues can be used as a basis for requesting a reduction. Independent quotes from relevant tradespeople can strengthen your position in this negotiation. Vendors who are motivated to sell may be willing to adjust the price rather than lose the deal, particularly if the issues would need to be disclosed to any future buyer. This is a common and legitimate outcome after a concerning report.

Option 2: Request Remediation Before Settlement

Rather than a price reduction, some buyers prefer to ask the vendor to carry out specific repairs before settlement. This approach can work well for defined, scoped issues where the remediation is straightforward. It is important to be specific about what is required, and to ensure that any agreed works are documented in writing as a variation to the sale and purchase agreement. Your solicitor should be involved in documenting any conditions around vendor repairs to protect your position. Be aware that work carried out quickly before settlement may not always meet the standard you would choose if you were managing the project yourself.

Option 3: Walk Away Under Your Finance or Building Report Condition

If your sale and purchase agreement includes a building report condition - which most conditional offers do - and the report reveals issues you are not comfortable proceeding with, you may be entitled to cancel the agreement and have your deposit returned. This condition is there specifically to protect buyers in this situation. It is important to review the exact wording of your condition carefully, as the threshold for cancelling varies. Your solicitor can advise on whether the issues identified are sufficient to exercise the condition and guide you through the process of doing so correctly.

Option 4: Accept the Property As-Is With Eyes Open

In some cases, buyers choose to proceed despite concerning findings, having fully understood what they are taking on. This can be a reasonable decision if the issues are manageable, the price reflects the property's condition, or the buyer has specific skills or resources to address the defects. Proceeding with a full picture of known issues is very different from proceeding in ignorance. If you decide to accept a property with known defects, it is worth understanding how those defects might affect your lender's willingness to lend and the value they will place on the property.

What Lenders Think About Problem Properties

Significant structural or weather-tightness issues can affect a lender's decision to approve a mortgage on a particular property. Lenders carry out their own valuations and may have concerns about properties with known defects, particularly those related to leaky building issues, foundation problems, or earthquake risk. If a builder's report reveals serious concerns, it is worth checking with your mortgage adviser whether those issues are likely to affect your finance condition. Some lenders may decline to lend on certain property types regardless of the purchase price.

Getting the Right Advice

Navigating a problematic builder's report requires input from your building inspector, your solicitor, and your mortgage adviser. Each brings a different perspective: the inspector explains the technical issues, the solicitor advises on your legal position and options under the agreement, and your mortgage adviser can flag any implications for your finance. At Chaperone, we are here to help coordinate that process and make sure you are not making a high-stakes decision without all the information you need. A builder's report raising concerns is not automatically the end of a purchase - it is the start of a more informed conversation.