You’ve finally arrived at the end of a thorough search for just the perfect home. You’ve found it — and now you are prepared to make an offer. Typically, you order inspections after
your offer is accepted so it’s a good idea to clearly outline that your offer is contingent on the outcome of the termite inspection report for closing.
Do lenders require a termite inspection?
Although buyers are expected to pay for home inspections, the best-case scenario is that both buyer and seller would have inspections performed with each covering the cost of their own. Critical among these is the termite/pest inspection for home purchase, the results of which lenders are very interested in knowing, since termite damage usually means structural damage. VA loans have strict requirements for termite inspections. Termites work literally behind the scenes — within the inner walls of a structure — silently and persistently chewing through wood, flooring and even wallpaper. And, unless an eagle-eyed occupant of the home knows how to identify the telltale signs of termite activity, steady destruction can go undetected for years without anyone in the home ever hearing of it. It’s a devastating shock when the inspector uncovers damage that will need repair before the home can be financed by a lender.
Who pays for the termite inspection and repairs when buying a home?
The cost of a termite inspection varies depending on your location and the home size, but generally ranges from $50 to $150. The seller will typically pay for a termite inspection report and the inspection must take place within 30 days of closing.
Most professional real estate agents agree that who covers the repair expense is negotiable but it’s a good idea to get "who pays for what" in writing. Sometimes a seller will put a cap on the amount they are willing to pay. But according to Homebay.com, the reports describe items as either “Section 1” or “Section 2”. Section 1 items of a termite inspection report typically fall into the closing costs for the seller, which means the seller would pay costs of remediation, like tenting or spraying, to eliminate an active termite infestation. The seller also pays for repair of dry rot or wood that has been chewed by termites. But buyers are expected to pay for Section 2 items, which outlines the inspector’s termite prevention measures and recommendations.
Telltale Signs of Termite Damage
Professional pest inspectors will carefully examine inside and outside the house for potential entry points and signs of termite infestation. There are two types of termites: the drywood variety which burrow deep within wooden structures, and subterranean termites, which dwell underground. Never underestimate the importance of knowing what they look like and being able to differentiate these pests from flying ants or others in the insect world.
Extensive damage can be left by both varieties before you even know they are there. The most telling sign of termite infestation is damaged wood. Pest control giant, Orkin, lists several more clues showing termite infestation such as discolored drywall, peeling paint, and many others.
Hard Costs of Remediation and Repair
Pest control professionals will spray a chemical in areas where termites have been seen and in other areas that may be necessary. They generally charge for chemical treatments in and around your property by the linear foot — not by the square footage of your home. Costs average between $4-$16 per foot; with complete treatments typically averaging $1,300-$1,500.
Termites can literally eat into a home’s all-important structure which includes support beams, floor joists, posts, ceiling joists and wall studs. Depending on how much and exactly what termites ate, the average cost incurred by homeowners to repair termite damage is $3,000.
Termite Inspections for VA Loans
VA home loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide more favorable terms. VA loan termite/pest inspections fall under the Minimum Property Requirements (MPR) that a home must meet to ensure that military families move into a safe, structurally sound and sanitary place.
The VA termite inspection requirements do not allow you, as the buyer, to pay for the termite report, unless the loan is a refinance; that fee is usually paid by the seller and VA loan lenders will require an invoice that proves it. In the case of a refinance, the fee could be included with closing costs on a VA Interest Rate Reduction Refinance Loan (IRRRL), but you wouldn’t be able to roll them in on a VA Cash-Out refinance.
If you have questions about pest inspections for a new home purchase contact a one of our Freedom Mortgage home loan specialist online, or at 877-220-5533 to learn more.