What happens in a termite inspection and why it can affect the sale of a property.
Termite inspections and treatments have become a natural part of my 58 years in pest control. As I neared driving age, dad was anxious to throw me the car keys. Not to retire as my chauffeur, but so we could double up our efforts on completing required inspections for mortgages.
Termite inspections, now more commonly referred to as pest inspections, were initially only required of VA or FHA mortgages unless the appraiser felt one was necessary.
Today they are as commonplace as a credit check or title search. Even most home inspection companies are including pests in their menu options.
The real bottom line logic behind an inspection? Protection — for the buyer and the bank.
The lender wants to assure that their collateral will not be losing money with pests nibbling away on their investment, detracting from the value.
While referred to as a pest inspection, the primary focus is on wood destroying insects (WDI). These include termites, powder post beetles, carpenter ants and carpenter bees.
Nonwood destroying pests are usually not included in the report. Bed bugs, cockroaches, mice and the usual gang of vermin are not reportable unless otherwise specified.
Some companies expand this to wood destroying organisms (WDO). They include rot/fungus damage in their scope of the inspection. These organisms can be just as devastating as insects, essentially affecting the entire substructure.
This inspection focuses on two aspects: infestation and structural damage. Is there evidence of pests and are they active? Have these pests caused damage requiring repairs?
Both aspects can have serious consequences on the value of a structure. A failing inspection has been known to sink a transaction.
Hearing of an infestation has often scared away buyers, especially those who have had a past traumatic experience.
Regardless, lenders will move forward in the process as long as the problems are corrected. But who is financially responsible?
Many contracts spell out these details, even going as far as placing a dollar ceiling on expenditures.
As a general rule, the buyer pays for the inspection. The seller corrects the problems.
Logic dictates. If the sale collapses, the seller owns the property with the problem. It would be in everyone's best interest to correct the issue.
The pest inspection is often the last piece of required contingent documentation to be ordered. Consequently, the report is often filed within a week or two of closing, adding pressure to all concerned parties.
Difficulties arise when there is substantial damage. Additional reports, estimates and supporting documentation all need to be submitted in a timely fashion. Contractual deadlines are of utmost importance.
It is also imperative that there is clear communication among all parties to the transaction. I vividly recall a phone call from a closing attorney looking for a never ordered report. An unexpected time out was taken while I drove over to perform the inspection, calling in my results to the anxious participants.
Fortunately, there was no evidence of an infestation. And the closing resumed, albeit 90 minutes longer than expected.
NEXT WEEK: Don’t Kill the inspector/messenger.
Henry Fox is the owner of Henry N. Fox Professional Pest Management. You can ask him questions at email@example.com.