Termites are little bugs that love to eat wood. There are a number of types of termite, mostly relating to us as to how they access the wood, the good news is they eat slowly. The bad news is they cost money to clean up after.
“Termite Inspection” is a little misleading in that it really includes anything that eats wood. This would include; termites, ants, beetles, bees and fungus(dry rot) as far as I know. I try, but can’t know everything.
This is one of the most important and hardest inspections to do on real property, strangely the cheapest. Often free or under $75.. This inspector will take his flashlight and probe to look at every accessible inch of the house, usually for an hour or so. Please note I said accessible. They are not responsible for lifting carpet or moving furniture. But if they don’t find it and should have, and the buyer does find it within two years, they will come back and fix it for free. I have seen them do it.
The termite inspector will look at every accessible square inch, up and down. The roof, attic, to the basement and or under the house (Spider, scorpion, rat, mouse, rattlesnake city.) This has got to be the best inspection you get for the money. They don’t do mold, but they will spot it for you and then the buyer will pay to get that checked out. In most cases the seller as with termite removes the mold. But if it’s a short pay, the buyer, sometimes before the close of escrow, has to do the work so the loan will fund, be careful. Wait till right before the close of Escrow and still be aware you still might not close!
When you do repairs on an REO, you need writen permission to be on the property from the owner. if someone gets hurt, they were trespassing. They might sue you. You want to do things as close to closing as possible. Be sure to wait till after major issues are resolved. Or you could be a lot of cash out of pocket on someone else’s house.
I have been on inspections where an inspector looked up at an eave under the roof thirty feet away/up and called it dry rot. I thought he was nuts, as it turned out he was right!? Some are bad, but most termite inspectors are really good at what they do.
I always thought dry rot was just wood getting tired out by the action of water. So I was surprised to learn it’s a fungus that loves water and wood. One of the cool things about working with real estate is you learn a lot of varied things.
There are two aspects to the “Termite Report,”" Section 1″ which are things relating to damaged property from wood destroying beasts as I have described. “Section 2″ are things that can lead to such damage.
“Section 1″ repairs can be like tenting the house with a big plastic bag and pumping poisonous gas in for the day to kill anything that might be eating your house except probably fungus. Then after killing those bugs you must go in and fix what they did. A bag is usually a thousand or so and the repairs another few thousand.
Mostly there is “locally treatable” damage. That is wood that can be removed and just the area gets treated with chemicals in most cases. Much cheaper than “bagging” the house.
Subterranean termites are under the slab and the slab must be drilled through and treated. Not as expensive as “bagging the house.” Usually no repairs.
“Dry Rot” a fungus, is removed and the area chemically treated to prevent further. Then the dry rotted wood that was removed must be replaced.
Section 2 of the report refers to things that might lead to infestation and is often paid for by the buyer. These things are generally debris under a house with a raised foundation. Somebody did work and left wood under the house. Termites will come from the ground, get in that wood and possibly then the house. The wood just needs to be removed.
Sometime the dirt/mud from a hill will fill in next to the house. The wood of the house is raised off the ground to keep the termites out. If the ground raises, the wood boring termites will actually create mud tunnels, little mud tubes above the ground to the wood of your house and eat. To fix the Section 2 aspect of this issue the level of the dirt must be lowered, which can usually easily be done by anybody with a shovel.
I tend to help my clients by getting them to do some of these things so they won’t have to pay for something I think should be cheap and easy. Like removing a little earth from the side of a house or some debris from under it…
If it’s a “short pay” you have to be really careful of the Termite work, because the buyer will generally have to pay out front for it before title is in their name!
Most lenders (The entity you are planning on borrowing the money from.) want the “termite’ work done before the close of Escrow. The seller who is giving back his “home” for half of what he paid for it, is not happy. So in most cases the Seller is not going to put more anything into the house. The bank represents the investor who is getting burned for half it’s investment and is not real happy in this deal either, so they won’t put anything into selling in most cases. So that leaves the buyer.
The FHA loans are even more fun because they instruct the Appraiser to do a home inspection (Since 2009!!) and you have to fix things like peeling paint and termite to get your loan. I bought a couple good hand sanders.
Careful this will cause a lot of lawsuits. Buyers have to pay out of pocket to get these repairs done or not get their loans. If the deal doesn’t work out the buyers will lose their money(You did repairs on a house you didn’t own.)! So if the agent doesn’t point this out, his buyer may have a cause of action against the agent. Now the truth is, I don’t think agent should be necessarily sued or pay because he didn’t do the contract. This is an unfortunate gamble the “informed buyer” must take to get a short pay deal. The tough part is finding a good house. Sometimes buyers accept issues like short pays to get a home they love. If they make that choice they may have to suffer the consequences if it doesn’t work out. Just do it with your eyes open and time it so you are least likely to lose.
So it’s important the agent advises the buyer to wait till the last minute to do the work. That way when the work gets done, you are in escrow with the banks and seller’s signatures. Preferably going to close in about a week with all the issues settled. At this point your risks are much lower.
Termite repairs can often be easily done by a buyer with the written permission of the seller, and save a hunk of change. But nothing should be done till you have the short sale lender approval to go ahead with the deal. A buyer and I recently removed a patio cover that was a $4000. dollar tab for my buyer. And we did it in an afternoon for the cost of our time..
Once again, it’s prudent to wait till about two weeks before the close of the deal so you can be most assured you aren’t fixing the house for fun and profit of someone else.
If you are buying a house that needs “tenting” a process that fills the house with poisonous gas, I would let it ventilate for about a week before moving in. They tell you two days, but…
There are a few companies that offer other ways of killing the “pests’ that eat wood. Some freeze them, cook them and most poison them.
If the world/you show me any interest in knowing more I will gladly research other methods of clearing the house of little pests.
Your feedback is appreciated.
Best
Scott
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Nice post with all the details and great tips.