Termites can really bite into a real estate transaction.
by John Occhi

I recommend that sellers get a termite inspection report just prior to or immediately after putting their home up for sale.  With this report in hand the sellers will know exactly how much work will be required and how much it will cost to provide a termite clearance.  When an offer comes in from a potential buyer the seller will be able to negotiate any termite work from a knowledgeable position.  If sellers wait until after they have accepted an offer that obligates them to provide a termite clearance they could end up very unhappy when the report comes in with substantial work required. 

If sellers receive an offer and they have not had a termite inspection, it is a good idea for them to put a dollar amount limit on what they will pay toward a termite clearance.  If sellers put a limit on what they will pay there needs to be an understanding between the two parties as to what will happen if the termite report calls for work that exceeds the dollar limit.

Termite reports are broken down into two sections.  Section one addresses actual infestation and damage done by infestation or by fungus or other factors.  Section two addresses items that could lead to infestation or damage if not corrected.  A typical section two item is "earth to wood contact".  This could be a wood deck post in the ground that is not completely protected from the ground by concrete making it susceptible to subterranean termites or dry rot.

Who pays for a termite clearance is negotiable.  It is typical that sellers pay for section one items and buyers take responsibility for section two items.  On FHA and VA offers the buyers are not permitted to pay for any termite work and a clearance for both section one and two is required.  In this sellers market many sellers are negotiating a maximum amount of money they will pay toward a termite clearance.

The two types of termites that attack our homes are dry wood termites and subterranean termites. Subterranian termites attack from the ground and need moisture from the earth to survive.  Dry wood termites are the swarming kind that set up housekeeping wherever the swarming colony decides the wood is edible, often in the attic.  The treatment is different for the two types of termites.

In addition to checking for termites and damage done by termites, termite companies investigate a number of other problems including fungus and moisture conditions.

Most lenders require a termite clearance on the property, especially when the buyer puts less than 20% of the purchase price as a down payment.    All FHA and VA transactions require a termite clearance.

There are number of ways to eradicate termites including fumigation, locally treating with chemicals and freezing them.  Buyers and sellers should discuss their options and understand the pros and cons for each method.  If fumigation is required, the house will need to be vacant for several days.  If the property is tenant occupied there could be an additional expense putting up tenants in a motel. Your real estate agent can help you with the termite portion of your purchase agreement and keep the bugs out of the rest of your transaction.