Does your pre-purchase report tell the full story? Reports that don’t look at future problems can put your business, and homeowners, at risk.
In this article, we outline why changing your thinking on inspections and reporting can prevent complaints and expensive litigation. Plus, it gives homeowners a lot more value for their money.
The pre-purchase report landscape
To understand why a change in reporting is needed, let’s first look at the pre-purchase report landscape, which has changed considerably in the last 5 years.
Inspectors who work with real estate agents often feel pressure to give a “clean bill of health” on properties to make sure they get ongoing work. At Rapid Solutions, we regularly hear of stories of inspectors being asked to change reports by real estates agents.
Additionally, the rise of third party platforms like Before You Buy mean that inspectors might never meet their actual customers – until they bring a claim against you! Not only is litigation relatively easy to access, homeowners are wise to their consumer rights.
Home insurers are regularly pushing back on claims from storm damage saying the issue was maintenance related and often recommending the homeowner take another look at their pre-purchase report if they’ve owned the house for a few years or less.
And when defects are uncovered, including through renovations, homeowners already feeling the pinch on cost of living may look to you the inspector and your insurer to foot the bill for unbudgeted repair costs.
Claims case study: Termite troubles
To show pre-purchase inspectors the importance of telling a complete risk story, here’s a claim that went to the New South Wales Civil and Administrative Tribunal:
Homeowners brought the claim against a Rapid Solutions client due to termite damage. During the home’s pre-purchase inspection, the inspector incorrectly identified termite damage in the fence as wood rot. He inspected the laundry but found no evidence of risk.
Later, the new owners found termite damage in a laundry room while doing renovations, which lead to their claim coming before the Tribunal.
The Tribunal member found against the inspector and Rapid Solutions, stating that he wasn’t satisfied that the inspector had adequately inspected the laundry because there were no photos of it in his report. The Tribunal member didn’t accept that further invasive inspections, including in the trees and landscaping timbers, was not within the inspector’s scope.
The homeowners were awarded $45,000.
When is a property high-risk for termite damage?
When it comes to termites, it’s important to report not only on current termite damage, but on how conducive the property is to a termite infestation. And, as our below checklist will show you—most properties are high risk:
- The home has no current termite management system
- There are high moisture readings, leaks or service overflows
- There are timbers in contact with the ground (and thus a food source)
- There are trees within 50m of the building
- The house has a roof and/or a subfloor
- The house has been renovated or needs renovating
The home mentioned in the above case study had at least a few of these indicators. If the report had noted these, a claim could have been avoided.
How to improve your pre-purchase reports
As the above example shows, good inspection reports don’t just list what’s wrong now—they warn about what could go wrong. Reports are usually on the condition of the house at time of inspection—but this needs to be flipped. Reports should also mention the risks associated with the property, including what you can’t see.
Here are some ideas on how to improve your inspection and report:
1. Provide actionable recommendations
Make reports more useful by including specific advice for buyers:
- Invasive inspections: Recommend invasive checks (like lifting carpets or removing insulation) where the risks of hidden damage are high.
- Specialist follow-ups: Suggest further inspections by relevant professionals, such as plumbers, roofers, or pest specialists. Make the recommendation specific and supported by photos. Generic recommendations and listing extra trades will not be a strong defence in a claim.
- Maintenance advice: Provide clear guidance on areas that need regular monitoring or maintenance, like roofs or subfloors and be specific as to the risks that might arise there.
2. Use detailed photographs and evidence
Photographs help communicate risks clearly and protect inspectors from claims. Include:
- Current defects: Document all visible issues, from cracks to watermarks.
- What’s missing: Use photos to show areas you couldn’t access, like obstructed subfloors roof spaces.
- Testing results: Include photos of moisture readings or other testing equipment results to back up your findings. even if the readings are “normal”.
Ultimately, adopting a risk-focused and detailed approach to inspections and reports can prevent claims and protect both inspectors and homeowners.
Insurance for the unexpected
Case studies like these show important it is protect yourself with general liability insurance and professional indemnity insurance. It gives you financial protection against legal claims, damages and more.
You’ll also have access to support from our experts who are leaders in pest control and our claims team are skilled and ready to support you in times of customer complaints.
Call us on 1300 309 169 or contact us online to start your quote.