Navigating Real Estate Negotiations: The Building and Pest Clause Dilemma

In the dynamic world of real estate, relationships are pivotal. A key aspect where this becomes evident is during the negotiation phase, especially when a building and pest clause is involved. Often a standard part of real estate contracts, this clause is becoming a hotbed of contention in our industry.

The Inspection - More Than Meets the Eye

The building and pest inspection are crucial processes. It's conducted by qualified professionals who assess the property's structural integrity and overall condition. This step is vital because it goes beyond the layman's understanding of building codes and intricate industry details. Without this expertise, many critical issues could be overlooked during a self-conducted inspection.

The Negotiation Challenge

However, a growing trend has emerged where both seasoned professionals and novices are leveraging the findings of these inspections to propose significant discounts - often in the range of $10,000 to $20,000 - on the contract price. This practice raises concerns. Selling agents increasingly express frustration over these hefty discount requests, which often lack a quantifiable justification. The aim seems less about addressing genuine issues and more about securing a bargain.

Best Practices for a Fair Deal

It's generally best to ask for minor rectifications before settlement as a condition of the sale. For more significant issues, options include setting aside a portion of the sale price in trust for fixed-price rectifications or agreeing upon a fixed-price reduction that is mutually acceptable to both the seller and buyer. However, the industry needs to standardise these reductions, typically ranging from $500 to $2,000, depending on the severity of the issues. If major structural problems are discovered, parties must consider exiting the contract.

Towards a Balanced Approach

The real estate industry thrives on trust and fair dealings. While it is understandable for buyers to seek the best deal for their clients, it's equally important to respect the property's value and the selling party's efforts. A balanced approach, with reasonable negotiations based on genuine inspection findings, will ensure that both parties feel satisfied with the transaction and the ability to maintain the relationship over the long term.

This issue highlights the need for ongoing dialogue and policy reviews within our industry. By fostering a culture of fairness and transparency, we can uphold the integrity of real estate transactions and maintain the strong relationships that are the cornerstone of our industry.