Many buyers include inspection contingencies in their purchase offers. A common one is a termite inspection, also called a Wood Destroying Insect (WDI) inspection. Buyers order and pay for these inspections early in the purchase process – prior to settlement day.
So why are WDI inspections performed? Because termites and other wood eating insects can cause real damage to a home and it’s important that buyers learn of such infestation and damage prior to purchasing a home. Corrective action can then be arranged or, if the problem is severe enough, the buyer can choose to flat out cancel the purchase contract.
Termites are subterranean creatures who live in large colonies. And although they may start out underground, it doesn’t take much for them to construct and place mud tubes in basement joists, sill plates, and crawl spaces that will allow them entry into a home.
They can also gain access to a home through wood that is in contact with the soil. This includes porch steps and supports, doorframes, deck supports and more, according to the pros at Orkin.
Evidence of an infestation can throw a real estate transaction into turmoil. The homeowners may be clueless about it and it can scare the daylights out of a buyer.
Please note, termites aren’t a problem in many parts of the country, but if they are prevalent where you live, you’ll naturally want to have the home inspected by a pest control expert before purchasing. And if you’re using an FHA-backed loan, get to know its policies when it comes to pest inspections.
What FHA has to say about it
The FHA only requires borrowers to order a termite inspection under any the following circumstances:
- If the FHA appraiser sees evidence of an active infestation.
- If state or local jurisdictions mandate the practice.
- If wood destroying pest inspections are customary in your area.
- If the lender requests one.
So, what does the inspector look for?
- The mud tubes mentioned earlier are one indication of an infestation. For several reasons (access to a food source is one), termites construct these tubes from the soil to wood. Sometimes the inspector has no trouble finding mud tubes. Sometimes, they are hidden in ceilings, behind baseboards, under the floors and behind walls.
Check out Orkin’s website to learn more about mud tubes and to see photos to help you identify them.
- The inspector will also look for termite wings. Like moths, termites may cluster around light sources, so one sign of an infestation are their wings littering windowsills or stuck in cobwebs.
- The inspector may check any wood structures on the property, such as fencing, wood mulch in the garden, firewood stacks and wooden structures.
- Termite damage is a sure-fire sign of an infestation, so the inspector looks for evidence on wood surfaces, such as floors.
Who pays for the termite inspection?
Although FHA doesn’t care who pays for the inspection, and it is a negotiable item, whether the seller or the buyer traditionally pay for it varies by region.
Homebuyers who live in regions with a high probability of an infestation may want to make the inspection a contract contingency, requesting that the seller pay for it.
If, on the other hand, the lender demands an inspection, the buyer will typically pay for it. Again, this varies by region.
What if an infestation is found?
Termite inspection reports are broken down into two parts, Section 1 and Section 2. The former includes a report of active infestation and damage — items that must be remedied now.
Section 2 items are those that may lead to an infestation in the future.
If you have any concerns about wood destroying pests in a home you are interested in purchasing, have the home inspected. The national average cost of a home inspection is $537, according to homeadvisor.com.
The national average cost for termite treatment, however, varies according to the scope of the problem, the size of the home and other factors. Plan on paying between $1,300 and $3,000, according to costhelper.com.
The author, Rick Sheppard, is a licensed real estate broker with RE/MAX Achievers, Inc in Pennsylvania and a 33+ year veteran of the real estate trenches. He knows a lot because he’s seen a lot. If you have any questions about this or any real estate related topic, feel free to contact Rick at [email protected] and he’ll do his best to answer your questions.