The role of a home inspector is to identify problems. Obviously, in the course of any given inspection, the inspector will not be able to locate every problem. But the intent and the hope is that the inspector will locate, at a minimum, the bigger issues. Unfortunately, the home inspection process includes instances of uncertainty.
Below is a photo of wood destroying organism damage -- structural lumber was exposed at the exterior. The scenario is not hard to understand: Heavy moisture exposure and rot. There were, also, signs of tunneling by wood destroying insects. Probable culprits are carpenter ants but, on the other hand, the wood is wet most of the time so it might have attracted dampwood termites or moisture ants as well.
In this case, any view behind this wood was restricted to not at all. The inspector cannot determine the extent of damage and how far it might extend back into the wall or substructure. The only way to determine just how egregious the rot and insect damage might be involves having a contractor remove materials to obtain a clear view.
Situations like this can be frustrating. An inspector, when it is possible to do so, likes to give at least some estimate of the extent of damage. But, on occasion, being specific is not in the cards -- too many visual limitations apply to the inspection process and the inspector cannot hollow out wood to look for bugs.
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