Anatomy of a termite report
Originally appeared in Hills Publications, June 15, 2007 and ANG Newspapers, June 3, 2007
As a buyer or seller, if you do not see the big picture painted by structural pest control (termite) reports, and your agent does not point out the pitfalls, you could, unknowingly, make some very expensive mistakes.
Watching buyers scan these reports at open houses, or prior to writing an offer, I know few will have a full grasp of their subtleties and implications. A seemingly not-too-expensive one may have numerous hidden time bombs totaling serious money.
What follows is a summary of an actual pest control report. The inspector’s section-by-section findings are followed by my comments. Prior to my receiving it, the seller’s agent told me the dollar amount. I asked if, upon reading it, I would find any bad surprises. The answer was “no,” but, after seeing it, I questioned that response.
Substructure
Finding.. “Signs of past moisture intrusion…This is not uncommon to a structure in this area. The amount or cause of moisture intrusion is beyond the scope of this inspection.”
Comment.. Moisture intrusion is code for a potential drainage problem. To properly correct this may or may not be expensive. If not handled, moisture intrusion will most likely continue. The inspector’s statement that this condition is “not uncommon” might erroneously cause the inexperienced buyer or seller to think he need not be concerned. The reader was correctly told to contact a drainage expert to evaluate.
Finding.. “Evidence of subterranean termites was observed” There may be concealed damage in inner areas. Should these concealed areas be opened, a further inspection will be performedand cost quote, if any.”
Comment. Active infestation is worrisome. Damage is ongoing and could substantially increase the final price tag. The more areas calling for further inspection, the greater the possibility of higher repair cost.
Finding. “This area is inaccessible for physical inspection due to lack of clearance. For an additional inspection fee, the company will return and issue a supplemental report and cost quote.”
Comment. An example of an inaccessible area is where a basement wood floor is added over soil or concrete with little or no clearance. This could be a non-issue, but, without ripping up the floor in a number of places, it is impossible to know if problems exist. Out of practicality, few sellers agree to have a good floor torn up “in case” there is infection or infestation.
Finding. “Fungus damage was observed to the framing at the stucco areas as indicated. Owner should engage the services of an appropriate contactor for recommendations and repairs as necessary.”
Comment. Although the termite company indicated it would do stucco work on part of the house, it is suggesting here that another company do the work on this item. They should be asked why. Of course, the cost for this section will be an additional expense.
Foundations
Finding. “The foundation of this structure was found to be concrete saddle over rock or stone…Some cracks, voids and deterioration was noted to the foundation.”
Comment. The foundation may, or may not, be substandard. The report properly recommended this be reviewed by an “appropriate contractor or engineer.” This item is a major red flag because it could be really expensive.
Porches, steps
Finding. “Fungus damage was observed at the front porch overhang. Damage is apparently due to past and/or present roof leakage. At the completion of repairs, owner must engage the services of a licensed roofer”
Comment. Roof leaks are another possible problem with this house. The cost to repair roof is in addition to the termite company’s bid.
Other observations
Competent, caring agents explain the possible implications and issues to their buyers and sellers. Where further inspections are recommended in the report, they should be done, but must be balanced against damaging the property with low reward regarding the likelihood of finding a serious problem. Logic and experience play an important part in this decision.
Veteran, local selling (buyers’) agents know which termite companies have a reputation for comprehensive reports, fair prices and good quality work. A low bid by a suspect company should be a danger signal and highlighted by the selling agent to his buyer.
Sellers, especially those who have lived in their older home for a long period, may be shocked at an expensive report. Top professionals prepare their sellers for this contingency.
Final Thoughts
Remember that an incomplete report, one that has numerous references to “further inspection,” handicaps you, as a buyer or seller, from getting the full story. Listing agents should, but do not always, recommend to their sellers that they have these further inspections handled before the home goes on the market. This will provide a more accurate bid to prospective buyers and may save in the cost and time of additional reports.
Structural pest control reports can have a modest price tag or sometimes exceed $100,000. As a buyer or seller who rarely reads this type of report, you cannot be expected to understand all its nuances and potential traps. That is why you must rely on a real estate professional to guide you through the document. Make sure you work with one who will do this for you.
Related Articles:
Not Just Termites, Part 1
Not Just Termites, Part 2