Construction, Building and Site Analysis
Construction, Building and Site Analysis tests whether you can identify physical defects, remediation costs and obsolescence that affect value. It covers weathertightness, earthquake, hazardous materials, geotechnical issues and site contamination.
Building and site issues
The Building Act 2004 and Building Code set minimum performance. Weathertightness failures can require cladding replacement, framing repair and consent costs. Earthquake assessment is expressed as a percentage of new building standard; low percentages can trigger strengthening, insurance and lending consequences. Asbestos, methamphetamine contamination, liquefaction and contamination need specialist reports.
Worked example
A 1960s house has a leaky deck and cladding. Repair cost is $120,000, temporary accommodation $20,000, and the market applies a 10% stigma to the repaired value of $900,000. Indicated value = $900,000 − $120,000 − $20,000 − $90,000 = $670,000. Explain that the stigma is evidence-based, not a standard percentage, and avoid deducting both repair cost and a full rebuilt-cost depreciation.
Depreciation
Physical deterioration, functional obsolescence and external obsolescence must be separated. Remediation cost is not the same as loss in value; market evidence should support the discount.
Traps
- Deducting repair costs twice.
- Assuming all earthquake damage is covered by insurance.
- Ignoring consents and engineer's reports.
- Using a generic stigma percentage without market support.
- Missing contaminated soil or asbestos.