Due diligence is the process of thoroughly investigating a property before you commit to buying it. It’s the difference between a smart purchase and a costly mistake—and it’s the step most commonly rushed or skipped entirely by eager buyers.
Every property has a story that the selling agent won’t tell you. Hidden structural issues, problematic zoning restrictions, planned developments that will tank your view, body corporate disputes buried in meeting minutes, flooding risks that only emerge in a one-in-fifty-year storm. Due diligence is how you uncover that story before it becomes your problem.
Building and Pest Inspection
A combined building and pest inspection is the most fundamental due diligence check and should be completed on every property purchase without exception. Skipping this to save $500 is the definition of false economy.
What the Inspector Checks
A qualified building inspector will assess the structural integrity of the property, including:
- Foundation and footings (cracks, movement, subsidence)
- Roof structure and cladding (leaks, sagging, damaged tiles or sheeting)
- Internal and external walls (cracking, moisture, damp)
- Wet areas (bathrooms, laundry, kitchen) for waterproofing adequacy
- Electrical and plumbing systems (visible defects only—a building inspector is not an electrician or plumber)
- Drainage and site grading
- Fencing, retaining walls, and external structures
The pest inspection component looks for evidence of termite activity, wood decay, and conditions conducive to future infestation. Termite damage is one of the most expensive issues to remediate and is not covered by standard home insurance.
Cost: $400–$800 for a combined building and pest inspection on a standard residential property. Allow extra for larger properties, multi-dwelling sites, or properties with pools.
What to Do with the Report
No property will come back with a perfectly clean inspection report. The question is whether the identified issues are minor maintenance items or major structural concerns. Common minor items include cracked grouting, worn weatherstripping, and minor cosmetic damage. Major concerns include significant foundation cracking, active termite infestation, extensive water damage, or non-compliant building work.
Use the report as a negotiation tool. If the inspection reveals issues requiring $10,000–$20,000 in remediation, that’s grounds for a price reduction or for the vendor to complete repairs before settlement.
Strata Report (Units, Townhouses, and Apartments)
If you’re buying a strata-titled property, a strata report is essential. This document reveals the financial health and governance of the owners’ corporation (body corporate) and can uncover issues that would never be visible from a physical inspection.
Key items to review:
- Sinking fund balance — Is the fund adequately provisioned for major works (roof replacement, lift refurbishment, painting)? An underfunded sinking fund means special levies in your future.
- Special levies — Are there any current or upcoming special levies? These can run into tens of thousands of dollars per lot.
- Meeting minutes — Review the last 2–3 years of meeting minutes for disputes, complaints, building defects, or planned works that will affect the property.
- By-laws — Check for restrictions on pets, renovations, short-term letting (Airbnb), and parking usage.
- Building defects — Particularly relevant for newer buildings (less than 10 years old). Are there any active defect claims or rectification works underway?
- Insurance — Confirm the building is adequately insured and check for any recent claims.
Cost: $200–$400 for a strata report from a specialist provider.
Title Search and Encumbrances
A title search reveals the legal ownership of the property and any encumbrances (restrictions) that apply to the land. Your solicitor or conveyancer will conduct this, but you should understand what they’re looking for:
- Easements — Rights of access across the property for utilities, drainage, or neighbouring properties. An easement can restrict where you can build or extend.
- Covenants — Restrictions on how the land can be used, often imposed by the original developer. Common covenants include minimum dwelling size, building materials, and restrictions on outbuildings.
- Caveats — A caveat is a warning on the title that someone else claims an interest in the property. Properties with active caveats should be approached with extreme caution.
- Mortgages and liens — Existing mortgages will be discharged at settlement, but you should confirm this is happening.
Zoning and Planning Checks
Zoning determines what can and cannot be done with a property and its surrounding land. This is particularly important for investors considering future development potential or renovation.
Check with the local council for:
- Current zoning classification — Residential, commercial, mixed-use, rural, etc.
- Permitted uses — What you can do with the property without needing council approval.
- Development applications — Has the vendor or previous owner lodged any DAs? Are there any active DAs on neighbouring properties that could affect your property (e.g., a multi-storey development next door)?
- Heritage overlays — Heritage-listed or heritage-overlay properties have significant restrictions on renovations and alterations.
- Minimum lot sizes — Relevant if you’re considering subdivision.
Flooding, Bushfire, and Natural Hazard Checks
Natural hazard risk varies dramatically by location and can significantly affect insurance costs, future property values, and your ability to develop the property.
- Flood mapping — Check your state’s flood mapping tool to determine whether the property is in a flood-prone area. Properties in designated flood zones may face higher insurance premiums, restrictions on building, and difficulty obtaining finance.
- Bushfire Attack Level (BAL) — In bushfire-prone areas, properties are assigned a BAL rating that determines construction requirements. Higher BAL ratings mean more expensive building requirements and higher insurance.
- Contamination — Check the relevant state EPA register for contaminated sites. Former industrial, commercial, or agricultural land may have soil contamination that is extremely expensive to remediate.
- Mine subsidence — In areas with historical mining activity, check the mine subsidence register.
Comparable Sales Analysis
Before making an offer, you need to know what the property is actually worth—not what the selling agent tells you it’s worth. A comparable sales analysis examines recent sales of similar properties in the same area to determine fair market value.
Key factors in selecting comparables:
- Sold within the last 3–6 months
- Similar property type (house, unit, townhouse)
- Similar land size and floor area
- Similar condition and age
- Same or adjacent suburb
This is an area where a buyer’s agent adds significant value. Professional agents have access to comprehensive sales data and the experience to interpret it accurately, including adjustments for differences in quality, aspect, and location. If you’re buying at auction, having this data is critical for setting your maximum bid—see our auction strategy guide for more on this.
Contract Review
Every property contract should be reviewed by a qualified solicitor or conveyancer before you sign it. This is not optional, regardless of how straightforward the transaction appears.
Key items your solicitor should check:
- Special conditions (sunset clauses, subject-to-finance periods, building approval conditions)
- Included and excluded fixtures and fittings
- Settlement terms and timeline
- Vendor disclosure statements
- Section 32 (VIC) or equivalent vendor statement
- Any unusual or one-sided clauses that favour the vendor
Why Buyer’s Agents Handle This for You
Due diligence is time-consuming, detail-oriented, and requires knowing where to look and what to look for. A professional buyer’s agent coordinates this entire process on your behalf, engaging the right inspectors, reviewing the reports, identifying red flags, and using the findings to negotiate a better price or walk away from a bad deal.
Access to off-market properties is valuable, but only if you conduct the same rigorous due diligence on those properties as you would on any advertised listing. Off-market does not mean risk-free.
Get Expert Due Diligence Support
At Strategic Buys, due diligence is built into every engagement. We don’t cut corners, and we don’t let our clients skip steps that could cost them money. If you want confidence that every box has been ticked before you commit to a purchase, we’re here to help.
