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Difference Between A Vendor Report And A Building Inspector Report?

You’ve got your heart set on a property. It ticks all the right boxes when it comes to location and features. Best of all, it also comes with a bonus, ready-made vendor report. Surely that means you can keep the money you were about to spend getting your own report done and confidently power on with the purchase? Hold your horses! You might just be about to fall for one of the oldest tricks in the book.  A vendor report and building inspector report are two different things…..

Is There A Difference Between A Vendor Report And A Building Inspector Report?

The difference between a vendor report and building inspector report is immense, and it’s one that could easily see you land a lemon!  The report is paid for by the vendor so the inspection is going be done for their benefit, not you the purchaser.  Do you really want to rely on something that could potentially contain bias?

Why a vendor might get their own report done

There are two key reason why a vendor of a property might get their own report done:

  1. because they’re obliged to by law, or
  2. because they think it will help them sell the property.

Mandatory vendor reports

In some cases, if you’re selling a property, you must get a vendor’s report. In fact, in the ACT, vendors are obliged to obtain a building and pest inspection report in relation to a property they’re putting on the market. They’re called ‘building and compliance inspection reports’ and ‘pest inspection reports’. They must be obtained by a vendor for any previously occupied residential property in the ACT.

There’s no equivalent blanket obligation to get a vendor’s report in Queensland. There’s been a recent review of vendor disclosure obligations by the Queensland University of Technology in its Queensland Government Property Law Review: Issues Paper 1 (2014). However, Queensland vendors are not obliged to obtain and then supply would-be purchasers with a copy of their vendor report.

Optional vendor reports

So, all that begs the question that, if they don’t have to get a report, why would they? There are a few reasons.

A vendor might get a property inspection done to make a property appear more attractive to potential purchasers. Let’s face it: vendor reports are a relatively inexpensive investment when you consider the influence that a positive report may have over an inexperienced buyer. Vendors get better ‘bang for their buck’ by getting a cheap report done because it can lure a purchaser into a false sense of security about the property. If the vendor is lucky, it may influence a buyer to hand over their hard-earned money without getting their own report done.

A vendor report might also be commissioned with the sole purpose of zeroing in on the property’s discoverable faults. In other words, giving the seller of the property the heads up as to what might show up in a pre-purchase building inspector report. The vendor can then focus on rectifying the faults that will potentially erode the purchase price of the property. Vendors who obtain their own reports solely for this purpose aren’t interested in the wide range of issues that could potentially be identified in a thorough pre-purchase building inspection report. They just want to sell the property quickly.

Why it’s so tempting to rely on the vendor’s report and skip getting your own building report

When you’re squirrelling away every spare cent for a house deposit, a free report sounds like a tempting shortcut, saving you time, stress and money.

A vendor report feels as though the seller of the property is showing their hand by laying their cards on the table. Vendor reports are much cheaper than the cost of getting your own independent, thorough building inspection. Frequently, you can access them online for a small fee. They also save the time and hassle of teeing up a suitable time for your building inspector to carry out the inspection. It allows you to move quickly and, in doing so, spend less time agonising over whether to proceed with the sale. With vendor reports, the reality is, you get what you pay for.

Why most vendor reports aren’t worth the paper they’re written on

If the vendor has already obtained a report on the property you’re looking to buy, isn’t that a good thing? The short answer is no. Don’t ever be lulled into a false sense of security by thinking that you don’t need to do your own due diligence on the property.

There are several reasons for this:

  1. You can’t assume that the vendor report is an objective one. The inspection may have been carried out by an inspector with a pre-existing relationship with the vendor or with the vendor’s real estate agent. They might be under pressure to provide a favourable report or risk the vendor or their agent not using them again. Take a good hard look at just who is paying the piper when it comes to vendor reports.
  2. The report might play down serious and costly defects in the property or only focus on minor ‘decoy’ defects. You won’t necessarily know the scope of the inspection carried out and whether it was a thorough or a cursory inspection
  3. A vendor report won’t necessarily comply with the Australian Standard applicable to a pre-purchase building inspection report. You can’t assume that the vendor report was carried out by someone licensed, qualified and sufficiently experienced to a thorough job.
  4. The vendor paid for the report. This means that the contract exists between the vendor and the company that produced the report. In this case, you don’t automatically have access to the same complaints process, rights and remedies that you would be able to access if you commissioned the report; you’re a third party to that contract.

It can also have flow-on effects in terms of making a claim against the professional liability insurance of the person who authored the report. If they even have professional liability insurance, that is! For you to be protected from the sort of disastrous errors that are often made in vendor reports, the contract between the vendor and the author of the vendor report must expressly allow for the transfer of those rights to you as purchaser of the property. Not all do.

The proven benefits of getting your own building inspection report

Don’t be sucked in by a vendor report. You’re taking the biggest gamble of your life. Getting your own building and pest inspection report done on a property you’re looking to purchase is by far the safest way forward when you’re entering the murky waters of the property market.

With your own report, you can choose the person who carries out the inspection and, in doing so, ensure that they are a qualified, licensed and experienced property inspector. You’ll also have the peace of mind of knowing that they carry professional liability insurance in the unlikely event that they miss something of substance.

Secondly, if you commission your own building inspector report you can ask your building inspector to focus on the specific issues that are important to you. For example, you can explore the property’s potential for renovation or extension. You can get a much more accurate idea as to options for, and the cost of, rectifying the property’s existing defects.

A pre-purchase building inspection report is usually prefaced by a verbal report and an invitation to ask questions or continue the conversation about the property in greater depth once the written report has been completed. That’s something you don’t get with a vendor report: friendly expertise that’s just a phone call away.

The difference between a vendor report and a building inspector report is that only one of these is totally independent and working in your favour!

Need more information about the difference between a vendor report and a building inspector report? Talk to us at Action Property Inspections today on 1800 642 465

Andrew Mackintosh

About Andrew Mackintosh

Andrew Mackintosh has been answering home inspection questions in the greater Brisbane area since 1995. He has personally carried out over 20,000 building inspections and is a licensed builder and licensed building inspector, Member of Queensland Master Builders Association & Institute of Building Consultants. Being the business owner and the inspector, Andrew is passionate about providing clients with excellent customer service, value for money, honest, unbiased, thorough inspection and reporting in a professional and timely manner to allow clients to make informed decisions when purchasing property.