Not Just Termites, Part 1
Originally appeared in Hills Publications, July 5, 1995
“Termite reports,” properly called structural pest control reports/inspections, usually conjure up pictures and questions about reticulitermes flavipes, those wood-eating beasties. The average person usually does not realize there are other problems, some quite serious, that these inspections cover. Besides the destruction of wood by insects, pest control reports also deal with water damage. Wood rot caused by water is much more common than insect damage.
One of the important functions of a professional real estate agent is to read, understand and interpret these reports for buyers and sellers. The issues tend to be convoluted. Being expert at this requires considerable experience and an analytical, detail-oriented approach. Pest control problems are often costly. From experience, any report under $2500 to $3000 is considered “minor.” I have seen numerous reports in excess of $30,000 with some exceeding $50,000. The agent who knows how to deal with these reports is providing invaluable protection to his or her client.
When representing sellers, I always recommend they arrange for a pest control report one or two weeks before the property goes on the market, As I have said to many sellers, “Problems do not add value to the property.” It is better to know the problems in advance than to be surprised by them later. I also suggest that the seller give permission for “further inspections,” if needed, to take place during the initial pest control inspection. This saves the seller time and the added charge of a second visit. But, just what are further inspections?
These are necessary in areas which are not readily accessible, but where damage is suspected. Typically, they involve probing or drilling holes where none now exist. For example, a termite infestation under the house may extend up between the exterior and interior walls. By drilling holes at intervals above and around the suspect area, the inspector can ascertain the full extent of the damage. Water damage around a roof line may involve a similar procedure.
Once the report is in hand, where does the seller go from there? By having the report done before marketing the home, and if the dollar figure appears too high, a seller has the time to seek bids from other pest control companies. Initially, this appears to be a good idea, but a seller should also be aware of the potential problems which may ensue. Each additional inspection carries a cost varying from $75 to $125, but this is the least of it. Competitive reports rarely call for exactly the same work as the original. An inspection report is a function of the inspector’s interpretation of structural pest control regulations, therefore, reports on the same property from different companies commonly reflect widely varying problems, solutions and costs. To make matters worse, the second report frequently comes in at a higher price than the first. Disclosure law requires the buyer to receive a copy of all the reports, not just the lowest. When a prospective buyer reads two reports, he generally opts for the more expensive one. A third report complicates matters further. At this point, the answer is to have all three inspectors meet at the property with their three different reports and attempt to reach some agreement. Talk about tsouris!
Calling in a contractor
A possible alternative is for the seller to have a licensed contractor bid the work. A useful approach, it also has drawbacks. Only licensed pest control operators can provide a written pest control certification (commonly called a “clearance”). The seller may hire a licensed contractor to do the work at a lower cost. He then may pay the pest control company who did the report to come out and issue the certification. Unfortunately, although the pest control company will issue a certification, it will not warranty the work of others.
If the seller and buyer expect the contractor to warranty the work, certain questions need answering:
- How will the buyer know this contractor will be around in the future?
- Does the contractor actually have the resources to take care of a problem later?
- Does he have Errors and Omissions insurance?
- What if the inspector finds the work to be unsatisfactory?
- More importantly, what if the pest control company which did the initial report missed some expensive work, or additional damage is discovered during the course of repairs?
I know of instances where the items which were missed or later uncovered cost more than the original report. And, what if this is discovered months or even years later? Who is responsible? In the cases where I have seen this happen, everyone tends to blame someone else and the buyer ends up with the additional expense or threatens a lawsuit.
It is important to note here that pest control operators often give very fair bids and do quality work. Also, there are contractors who do an excellent job and are highly respected. The point is to assess each situation individually and understand the potential pitfalls. You must know with whom and what you are dealing. We have covered only some of the considerations regarding structural pest control. My next article will discuss how pest control work can disturb the roof and many other exciting topics.