James PuahWhen you’ve finally found the home you want and the building report lands in your inbox, it’s easy to focus on the obvious flaws. But many buyers make costly mistakes at this stage — especially when negotiating repairs.
Here are the most common pitfalls New Zealand buyers face after receiving a building report, and how to protect yourself.
Mistake #1: Focusing on Cosmetic Issues Over Major Defects
It’s tempting to fixate on things like tired paint, worn carpet, or outdated fittings. But these are often inexpensive and easy to update.
✅ Why this matters:
Major issues like moisture damage, foundation cracks, electrical faults, or roofing problems can affect the safety and value of the home — and cost tens of thousands to repair.
✅ What can go wrong:
- You might accept a home with serious hidden problems.
- You miss the chance to negotiate a lower price or get a credit at settlement.
- You could face major repair bills shortly after moving in.
✅ What to do instead:
Ask for a price reduction or cash credit, rather than repairs. This gives you control over who does the work — and how it’s done.
Review the building report with a licensed builder or independent inspector.
Prioritise negotiations around major concerns like:
Foundation movement or cracks
Roof damage or leaks
Water ingress or damp
Faulty wiring or plumbing
Asbestos or mold presence
⚠️ Why Letting the Vendor Fix Issues Can Backfire
Although it might seem convenient, letting the seller handle repairs before settlement is often a bad idea.
1. Temporary Fixes or Cheap Work
Sellers are incentivised to minimise costs. You might end up with patch jobs, like mold painted over instead of the leak being fixed.
2. No Legal Warranty
If the seller arranges repairs, you won’t have a contract with the tradesperson. You likely won’t be covered if the repair fails post-settlement.
3. No Input Into Workmanship or Materials
You have no say in who does the repairs, or whether the materials and finish match your expectations.
4. Rushed Repairs Before Settlement
Tight deadlines can mean low-quality work, especially for jobs like:
- Waterproofing
- Roofing
- Exterior cladding
- Drainage or foundation fixes
5. Disputes Over What Was Promised
If the repair quality isn’t clearly defined in the sale and purchase agreement, you could end up in a disagreement right before settlement.
✅ Better Options for NZ Buyers
A. Negotiate a Price Reduction
Reduce the purchase price to reflect the cost of repairs. This gives you full control over who does the work and how.
B. Request a Credit at Settlement
A monetary credit at settlement gives you immediate funds to complete the repairs after taking possession. Instead of the seller fixing the issue before settlement, they reduce the purchase price or provide a credit at settlement.
Pros:
- Simple and fast — handled at settlement.
- Gives buyer full control over repair quality and timing.
- No need for seller to manage repairs.
Cons:
- Buyer bears all risk — if repairs cost more than the credit, the buyer pays the extra.
- Buyer must trust the estimate is accurate.
- The loan amount approved by the bank might be lowered with the reduced house price, especially for the less than 80% LVR deal.
Or
Or a Repair Escrow. In a repair escrow, a portion of the purchase price is held by a neutral third party (like a lawyer’s trust account) until the agreed-upon repairs are completed. This ensures the funds are available for the repairs and provides a level of security for both buyer and seller.
Pros:
- Ensures repairs are completed to an acceptable standard.
- Adds legal/contractual accountability (escrow is often handled by a solicitor).
- It does not affect the approved loan amount from the bank.
- The fund can be held in the buyer’s solicitor’s trust account.
Cons:
A clearly defined scope of work and cost are required
More paperwork and legal complexity.
Slower process — funds can be held up.
C. Manage Repairs Yourself Post-Settlement
Once you own the property, you can complete thorough, lasting repairs with trusted professionals.
⚖️ A Legal Note for NZ Buyers
In New Zealand, vendors are not automatically liable for repair quality after settlement — unless it’s clearly spelled out in the sale and purchase agreement.
If the vendor manages the work and it’s done poorly, you may have no legal recourse after the fact. That’s why it’s usually smarter to negotiate a credit or reduction and take control yourself.
Final Thoughts
Buying a home in New Zealand is a big investment. Don’t let poor negotiations or vendor-led repairs cost you down the line. Focus on major defects, seek expert advice, and protect your long-term interests.
Need help with your home loan?
If you’re looking for advice on how these repair costs might impact your mortgage, or need guidance on your home loan options, feel free to contact me — I’m here to help.
