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If you’re in the market selling a home, chances are that a termite inspection will be asked for before closing the sale with a prospective buyer. However, is this report necessary? How much does it cost? Who pays for it, you or the buyer? We’re going to answer these questions and more in this short read.
Is a termite inspection report necessary?
We all know that a thorough home inspection is a part of the sale process. During the process, the inspector may not check your home, particularly for a termite infestation. However, a termite inspection may be suggested on the home inspection report.
A lot of American homes are built using wood, which features wooden decks and wooden furniture. Termites, as we all know, are wood-destroying insects. The risk of termites damaging your home is real, which is why the home inspector may recommend you produce a termite inspection report before closing the sale.
That being said, most states, including California, do not have a federal requirement for the seller to produce this certificate as a part of the sale process. However, in a lot of cases, mortgage lenders may not offer loans without one.
What does it cost and who pays?
Termite reports have two sections to them: Section 1 and Section 2.
Section 1 is when the seller pays for the inspection as a part of the closing costs of the sale. Normally, this is not a very expensive process, with the cost ranging between $50 and $150. In some cases, pest control companies offer free inspections, with the hope that they will indeed find termites and that they can charge for the more expensive termite treatments.
Of course, if they do find termites, the remediation cost will need to be borne by you, the seller. Once the property has been cleared of the pests, the company will issue what is called a termite clearance letter. Stating that the home is free of termites.
Section 2, on the other hand, is when the pest control company recommends certain measures, such as making sure no soil touches the home, as a termite control measure. The cost of these preventive measures is borne by the buyer.
What is the termite inspection process?
The process of inspecting a house for termites takes around an hour, and while both the buyer and seller can choose to be present, it is usually only the real estate agent who is present with the inspector. During the duration of the inspection, the inspector requires complete access to all interior and exterior areas of the house.
Inspectors look for signs of a current termite infestation, proof that an infestation has been treated recently, and signs of the possibility of a future infestation. The presence of termites can be recognized by mud tubes, discarded wings, frass, and hollow-sounding wood.
The report generated will include the following details:
- Whether termites or other wood-destroying organisms were actually found or not.
- Whether there is an active infestation or not.
- If any areas were not accessible to be inspected.
- If the environment is conducive to a future infestation.
- Whether the company carrying out the inspection also treated the infestation in any way.
What is an ‘as is’ sale?
Let’s suppose you got your home inspected for termites, and the pest control company did find signs of an infestation. Now, you, as the seller, can refuse to deal with the remediation and say you want to sell the house as-is, termites and all. This is called an “as is” sale.
This puts the buyer in a quandary. On one hand, the buyer can now negotiate a lower price on the property, since the onus of getting rid of the termites falls on them. On the other hand, it becomes more difficult for them to get a loan from a reliable lender.
The reason for this is that the home is the collateral on the loan for the lender, and they do not want termites destroying their collateral. This is why a lot of mortgage lenders refuse loans unless a termite clearance letter is produced.
Since all of this is a negotiable part of the real estate transaction, the buyer either asks for a contingency stating that the seller pays for both the inspection and the treatment, or the buyer pays for it themselves. However, in most cases, the seller relents and pays for it since they’re eager to close the sale.
Advice for sellers
People sell their homes for various reasons. Some may need the money to get through difficult times, while others may be excited to buy a new home. In any case, the sale of a home always brings some kind of closure with it.
As a seller, it always pays to be prepared to bear the cost of a termite inspection, and if needed, termite treatment as well. After all, you would not want a measly little bug to stand between you and peace of mind.