Decoding Termite Reports

During the escrow process, we receive a termite report…but then the questions start…

Why do I need this report? What will happen if there are termites? What is section 1 and section 2? What if I want a second opinion?

Part of the reason you see a termite report during escrow when you are purchasing your new home is because you want to make sure there are no termites currently eating away the wood the house is built of! Also, you need to know if any of the wood has water damage…you want that fixed before your buy it…right? But, you will also find out about potential problems in this report, including slopes that lead to the house, inadequate drainage, or other possible ways that water might pool near the structure. The report usually covers just the main house and everything attached to it. If there is a detached garage, it is also a good idea to have that included. Fences and other detached structures are usually not inspected.

So, when you write your offer, make SURE you are requesting that section 1 items on the termite report are fixed by the seller. This is not because you are a “picky” buyer…this is because you are a homebuyer who likely will have a loan to purchase your new home. The lender (mortgage company) usually does not require the property to be “free and clear” of infestation of termites and dry rot before they fund the loan on your new home (the exception is VA Financing). But, as a prudent homebuyer, you need to make sure that this is NOT something you give up in the negotiating process or, worse yet–you forget to check the box!

I have seen cases where these section 1 repairs are not quoted in the payoff statement for a short sale purchase…guess what? The lender DIDN’T approve these fees later on…the seller couldn’t contribute…so, where does that leave the buyer? Yes, paying for the repairs…

When buying a short sale or foreclosure, it is always best to ask for a section 1 termite clearance, bearingn in mind that many banks will not pay for the clearance and/or limit the amount they will pay. At least you know what you will need (or want) to do in the future regarding termite damage. Besides the usual termite damage, the report will also tell you if you have bees in your attic, fungus or dryrot in the wood there…so you can have a full view of what you will need to take care of yourself after you close escrow on your new house. It is very prudent to have viewed a full report prior to removing all of your contingencies.

If there are termites in the house you are purchasing, there are different ways to get rid of them…some companies may offer alternatives to tenting the whole house, such as local sprays, microwaves, orange oil, foam treatments, etc. The termite company should provide a guarantee of their work, whichever treatment they recommend. Sometimes, tenting the home is a preferred choice; depending on the location or extent of infestation…make sure you talk to the termite professionals about this. Usually the seller is the one who decides which way to get the property “free and clear” and provides the buyer with a clearance through their Real Estate Agent to the buyer. Since real estate agents usually guide the home seller in their decision, it is a good idea to discuss the type of clearance you will be receiving with your real estate agent.

Of course, there is more to know, and information is always changing, but this basic info should help to guide you. Make sure you ask questions during the process and get a second opinion when you feel that you need one.

At the Cristine Clark Team, we believe you should be educated throughout the escrow process so that you feel comfortable with the decisions you make during your home purchase. As a home seller, it is also important to know what repairs will need to be budgeted for and to be able to rely on an agent/Realtor who has the best professional advice for them.

Give us a call anytime, we are happy to help answer your questions about the escrow process, home buying process, home selling process, and general real estate questions.

Cristine Clark

Realty Executives REALTORS

760-758-1211

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