What are deal-breaker issues in a building report?
The findings that should genuinely change your decision are active termite infestation, structural movement (cracking that indicates the building is moving, not just settling), significant rising damp, and major roof, drainage or waterproofing failures. These issues are expensive to fix, often recur, and can affect the property's structural integrity or insurability. Cosmetic defects, ageing but functional systems, and minor maintenance items are common and are not usually reasons to walk away.
The Fuller Picture
A building report will almost always list something. Old homes have worn paint, ageing grout, and a few doors that stick. None of that is a deal-breaker on its own. What separates a normal report from a serious one is whether the defect is structural, active, or likely to recur regardless of what repairs are done. Termites are the clearest example: even if the current damage looks minor, an active infestation means ongoing risk to the timber frame, and treatment doesn't undo damage that's already occurred.
It gets more complicated when a report flags something ambiguous, like hairline cracking. Some cracking is cosmetic and related to normal seasonal movement in the slab. Other cracking is a sign of footing failure, which can cost tens of thousands of dollars to underpin. A standard building and pest report will often recommend a specialist structural engineer's assessment in these cases rather than giving a final verdict, because that level of diagnosis is outside the inspector's scope.
There's no formal government scheme that classifies building defects by severity, so the buyer carries the responsibility of deciding what's acceptable. Some contracts allow a short window to obtain further reports (such as a structural engineer's opinion) before the cooling-off period or 66W waiver locks the buyer in, which is why timing the inspection early in the process matters.
What This Means for Your Purchase
A deal-breaker finding changes your options: walk away (if you still can), renegotiate the price to cover the cost of rectification, or proceed with your eyes open and budget accordingly. Which option makes sense depends on how far along you are in the process. Before exchange, a serious defect is leverage. After an unconditional exchange, it's your problem to fix.
This is why timing the building and pest inspection is a financial decision, not just a due diligence formality. Buyers who inspect after signing a 66W waiver, or after the cooling-off period has lapsed, have far less room to negotiate or exit if something serious turns up. Buyers who inspect before making an offer, or during a standard cooling-off period, can use the findings to adjust price or conditions.
The financial implication is straightforward but often underestimated: a structural or termite finding can cost more to fix than the stamp duty saved by a lower purchase price, so it needs to be priced into the offer, not treated as a footnote. Getting a written repair estimate, not just the inspector's description, is what turns a vague concern into a negotiating figure.
How This Shows Up in the Illawarra
Termite risk is a genuine consideration across the Illawarra given the coastal and bushland-adjacent conditions in suburbs like Bulli, Thirroul and parts of the Shellharbour hinterland, where humidity and timber-frame housing stock combine. Older weatherboard and fibro homes common in suburbs like Warrawong, Berkeley and parts of Dapto often show up with more maintenance items in a report simply due to age, which is normal, but it means buyers need to distinguish age-related wear from active structural risk rather than being put off by report length alone.
Escarpment-adjacent properties, particularly in areas like Mount Kembla, Mount Keira or parts of Figtree, sometimes carry retaining wall or drainage considerations tied to sloping blocks, which a standard building report may flag for further assessment. In these cases it's common for Illawarra buyers to budget for a supplementary engineer's report before finalising an offer, particularly on older homes built before current stormwater and retaining standards.
Frequently Asked Questions
Can I use a building report to renegotiate the price?
Yes, if the report finds something genuine and you still have contractual room to act, such as during cooling-off or before exchange. A written repair estimate makes the negotiation concrete rather than a vague request.
What's the difference between a maintenance issue and a structural issue?
A maintenance issue is something that needs attention over time but doesn't threaten the building's stability, like a leaking tap or peeling paint. A structural issue affects the frame, footings or load-bearing elements and can be expensive and difficult to fully resolve.
Should first home buyers be more cautious about building reports?
First home buyers often have less financial buffer for unexpected repair costs, so a cautious read of a building report matters more, not less. It's worth budgeting a contingency for older properties rather than assuming the purchase price is the full cost.
When should I get the building and pest inspection done?
As early as possible — ideally before making an offer, or immediately during a standard cooling-off period. Waiving cooling-off with a 66W certificate before you've seen the report removes your ability to act on what it finds.
Is it risky to buy a property with termite history but no current activity?
Past termite damage with no current activity and confirmed repairs can be acceptable, but it's worth understanding what treatment was done, when, and whether ongoing monitoring is in place. Unclear or undocumented history is higher risk than a clearly resolved case.
Does a buyers agent help interpret a building report?
Yes — a buyers agent who has seen many reports can help you separate normal wear from genuine risk, and can bring in the right specialist (engineer, pest technician) quickly when a finding needs a second opinion before you commit further.
If a building report has thrown up something you're unsure how to weigh, we're happy to talk it through before you make a decision. Reach out and we'll give you a straight answer.
