Understanding Building Inspection Reports: Terms, Red Flags & Next Steps

Why This Report Matters More Than You Think

When you’re buying or selling property, few documents carry as much weight as the building inspection report.

It’s not just a formality—it’s your roadmap to understanding a property’s condition, identifying potential issues, and avoiding costly surprises.

If you've ever asked: "What do these building inspection report terms even mean?" or "Is this crack a big deal or just cosmetic?"—you're not alone.

In this post, we’ll break down what these reports really say (and what they don't), explain common red flags, and walk you through exactly what to do once you receive your report.

Quick Overview: What You Need to Know

Building inspection reports can feel overwhelming, especially if you're not sure what you're looking at. Here's a snapshot summary:

• Building Inspection Reports assess the condition of a property before sale, flagging safety risks, damage, and structural issues.
• They include both technical terms and general observations—understanding both is key.
• Red flags like moisture, structural cracks, or pest damage can influence sale price or even lead to walking away.
• After receiving your report, you'll need to choose: negotiate, proceed, walk away, or request specialist advice.

Want to dive deeper? Keep reading—we’ll help you read between the lines.

Breaking Down the Language: Common Terms Explained

Ever skimmed a report and felt like it was written in another language? Let’s demystify the jargon.

• Defect – Any part of the property that’s not functioning as intended.
• Major Defect – A serious issue that could affect the property’s habitability, safety, or value.
• Minor Defect – Cosmetic or non-urgent issues that typically require maintenance.
• Structural Movement – Signs the building has shifted over time (think: cracks in walls or floors).
• Dampness / Moisture Ingress – Water entering where it shouldn’t be, possibly due to poor drainage or leaks.
• Accessible Areas – Parts of the property the inspector could see or reach during the inspection.

Pro Tip: If something’s labeled “further investigation required,” don’t ignore it—it often means a more serious underlying issue is suspected but not fully confirmed.

Red Flags to Watch Out For

Not all issues in a report are dealbreakers—but some should make you stop and think. Here are the big warning signs:

Structural Cracks

Large cracks (especially around doors, windows, or in brickwork) can indicate foundation movement. This may require costly underpinning or repairs.

Moisture and Mould

Water stains on ceilings or walls could mean hidden leaks. If not addressed, they can lead to mould growth or timber decay—both expensive to fix.

Termite or Pest Damage

Australia’s homes are particularly vulnerable to termites. Evidence of pest damage, past or present, is a red flag that often requires immediate specialist assessment.

Unsafe Electrical or Plumbing

Outdated wiring, poor drainage, or faulty fixtures aren’t just inconvenient—they can be safety hazards.

Did You Know? A recent survey found that over 30% of buyers who skipped pre-purchase inspections later discovered major hidden issues. Don't be one of them.

What Happens After You Get the Report?

Once the report lands in your inbox, here’s what to do:

1. Don’t Panic—Read It Properly

Scan the summary, then dig into the detailed sections. Not every defect is a dealbreaker.

2. Ask the Inspector Questions

If anything is unclear or feels vague, contact the inspector. They can clarify severity and next steps.

3. Get Specialist Quotes (If Needed)

For major issues, get advice from plumbers, electricians, or structural engineers. Use their input to decide your next move.

4. Negotiate or Reassess

Use the report as a negotiation tool. If significant repairs are needed, request a price reduction—or reconsider the deal entirely.

Quick Guide: Making Sense of a Confusing Report

Intro:

You’ve found a property you love. The location’s perfect, the layout ticks every box—and then the building inspection report drops a bomb: pages of defects, moisture issues, and some vague structural warnings.

Common Challenges:

• What does “structural movement” even mean? Is the house collapsing?
• How do I tell what’s urgent versus cosmetic?
• I’m overwhelmed—should I walk away or negotiate?

How to Solve It:

Start With the Summary: Most reports include a defect summary table—this is your high-level overview. Focus on major issues first.

Use a Colour-Coding System:

· Red = Major safety or structural issues

· Yellow = Moderate concerns, might require further inspection

· Green = Cosmetic or minor maintenance

Call the Inspector for Plain-English Guidance: Most reputable inspectors are happy to walk you through the report—take advantage of this.

Don’t Skip Specialist Advice: If the report flags damp, electrical faults, or pest issues, get quotes. An electrician or pest control expert will give you real repair costs to factor into your decision.

Why It Works:

Instead of reacting emotionally, you’ll base your decision on facts, expert input, and realistic budgeting. This approach protects both your finances and your peace of mind.

Thinking of buying but unsure how to interpret a report? Get expert help before signing.

FAQs: Building Inspection Reports

What’s the difference between a building inspection and a pest inspection?

A building inspection checks structural and maintenance issues (cracks, water damage, etc.). A pest inspection focuses on termite or vermin activity. You can often bundle them for a full pre-purchase report.

Can a building inspection report affect my mortgage approval?

Indirectly, yes. If a property is deemed structurally unsound or hazardous, some lenders may require repairs before final approval—or reduce the loan amount offered.

How recent should a building inspection report be?

Reports are only valid as a snapshot in time. Ideally, they should be no older than 30 days before the settlement or auction.

What’s not included in a typical building inspection report?

Inspectors don’t check behind walls or under flooring. Most reports also exclude pool compliance, electrical testing, and asbestos identification—unless specifically arranged.

Conclusion: Know What You're Really Buying

A building inspection report isn’t just paperwork—it’s a window into the true condition of your future home or investment. Learning to understand its language, red flags, and next steps empowers you to make confident, informed decisions.

Don’t rush. Don’t ignore issues. And don’t be afraid to walk away if the numbers don’t add up.

Whether you're buying your dream home or evaluating an investment, the right knowledge could save you thousands—and a lot of future stress.