Termites - Who Pays When You Are Buying a Home? Do We Really Even Need a Termite Inspection?

Termites - Who Pays When You Are Buying a Home?  Do We Really Even Need a Termite Inspection?

If a house has wood in Southern California, it usually has termites.  Keeping up with the little critters can be a nuisance; and termite treatment can be a very costly endeavor.

In most cases, buyers should ask for a termite inspection and have the house treated and repaired wherever there is termite damage.  Sometimes the costs can run into the thousands of dollars.

One common misconception is that a termite inspection is required by lenders for any home purchase that is financed.  Not true.

A termite inspection and clearance is always required on a VA loan; however, on a conventional or FHA loan, the lender won’t necessarily request them.

Huh?  What do you mean, “won’t necessarily request them”?

Well, if a termite inspection is not mentioned in the California Residential Purchase Agreement (4A1), a buyer’s lender will not ask for it.  However, if it is noted in section (4A1), that either the buyer or the seller will pay for a “Wood Pest Report”, then the buyer’s lender will not only ask to see the inspection report, but will also demand to see that any termite damage has been remediated, and that means they will need to see a Termite Clearance report (also known as Termite Completion).

Why wouldn’t you want to have a termite inspection when you are buying a home?

If you are competing against other buyers on the purchase of a bank owned property, for example, you will increase your chances of getting your offer accepted if you don’t ask for the bank to pay for things that a competing cash buyer won’t ask them to cover.  See my blog Cash is King (Especially if you want to buy a bank owned home)for other ideas on increasing your chances of a successful purchase of a bank owned property.

Your termite choices are:

·         Ask for an inspection and request the seller to pay for Section 1 remediation.

·         Ask for an inspection and offer (as the buyer) to pay for treatment costs.

·         Don’t request a termite inspection in the purchase offer contract.

Even if the buyers choose not to request a termite inspection in the Residential Purchase Agreement, they can still have a termite inspector come out to the property and do a full inspection, at their cost.  Then, they can decide if they need to pay for treatment, buy the home without treatment, or cancel the contract because it would cost them too much.

In most cases, it is in the buyers’ best interests to have a termite inspection and a Termite Clearance report, and to have the sellers pay for it.  Sometimes, you may need to absorb those costs in order to get your offer accepted, especially if you are bidding on a bank owned property.  Even if you have to pay, as a buyer, make sure you get an inspection and find out what the costs will be to kill the bugs and repair the damages.

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