Termites can create a lot of havoc in your home and can potentially cause thousands of dollars worth of damage. When buying a home - you want to be sure to have an inspection done to see if there was ever any termite or other damage and whether or not there is still an infestation. But who pays for the inspection? The buyer or the seller? The other day I got a phone call from one of my colleagues and they asked asked if the seller has to pay for a termite inspection. After I explained the answer, it occurred to me that other people may have the same question so I thought I would touch on it a bit in my blog.
Before I start, I should say that I am in California - Fresno to be exact ...and I'm not exactly sure what the rules are outside of California. However, in California we don't use the term “Termite Inspection” any longer - that would marginalize an under-represented group of insects and is non-inclusive. We prefer to call it “Wood Destroying Pest and Organism Report”. Also, here in my state, like many other points of the contract, whoever pays for the termite inspection is negotiable. The buyer can always request that the seller provide a termite inspection or pay for one, however, the seller is under no obligation to do so.
Personally I think it makes sense for the seller to get a termite inspection up front and make it available to anyone looking at the property. After all - you're trying to sell a product and you want the world to know that your product in good condition, why make it more difficult for people to make the decision to purchase your house. Making buyers pay for the inspection decreases the chance of that buyer making an offer on the property because this is just another additional expense that they need to cover. Imagine if they went around buying property inspections for every house they looked at. I always advise my sellers to have an inspection done up front and just pay for a certification - then we use that as part of the marketing for the house.
Not all sellers are going to want to pay for a pest certification and if you get to one that isn't willing to pay for the inspection, then as a buyer you can look at it from two viewpoints. One of them is that perhaps they have something to hide and don't want to show a pest report in which case you want to make your offer contingent on it passing a termite inspection. The other school of thought is that in this current market, when competition is high and inventory is low it may be in your best interest to simply pay for a termite inspection yourself. I say this because you might find yourself in a multiple-offer situation in which case you're trying to make your offer look as attractive as possible - if you’re asking for the seller to pay for things - does it make you offer look attractive? Sitting side by side another offer that doesn’t ask for one could be the difference between winning the bid and losing it. You can write it up as a contingency of the sale - meaning that if it does has an infestation , you are not obligated to buy it - in fact - you want to to make the entire offer contingent on ALL of your inspections to ensure that you have a safety net and can get out of the contract if you need to.
Besides, many companies will come out and do a pest inspection for free. So if they do pest inspections for free then why are we even having this conversation? Because we're looking for more than just an inspection, we want for them to certify that the property doesn't have damage and doesn't have termites. The certification is what you're actually paying for and not necessarily the inspection itself. They're happy to do the inspection, because they like to find termites that you can pay them to remove. However if they find nothing they will sell you certification that proves there is no termites or damage. If there is any termite damage they will be able to point it out and let you know how much it will cost to get rid of the termites and get a certification.
So remember, ultimately it's a benefit to the buyer and the responsibility of the buyer to make sure that they do have an inspection done so that they go into it knowing all the potential issues. As far as who is responsible for paying for that inspection - that is a point of negotiation and will depend on the current market conditions and whether or not the seller would be willing to cover that cost. Best of luck to all of you!!
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Good informative, well written post. I'm with you on buyer paying to remove a possible contingency. I also live in California and being that it is California a very litigious and consumer friendly state, I would also consider it an advantage to remove the possibility of the buyer coming back to the seller with a law suit on undisclosed issues with the house after the sale.
Good to know. I've heard of cases where the seller did it, and others where the buyer did it, but it makes sense that if they buyer is doing it that the sale would be contingent on the house passing. Then they can back out if things are not in shape. They may not even have to pay for the inspection if the damage is bad. No need for a certification if the damage is clear.
I would add to that the buyer should make it contingent regardless of who pays for it because no matter what - you still want to have that option back out - and to be honest - this is already covered under the "Contingent on Inspection" clause and any inspection that reveals something that the buyer doesnt like is cause for them to cancel the contracts as long as they are within their inspection period and haven't removed the contingencies - so as long as you have included that clause ( which in california is the default ) then you still have enough flexibility to protect your interests.
That would be terrible to put an offer on a house, and then find out there's a ton of work that needs to be done. I had a friend who bought a house and the inspection company didn't check something, but signed off on it. There were issues later and somehow the inspection company left them out to dry. It was very unfortunate for them. You have to be careful, but even then sometimes it doesn't work out the way you want.
This is a concern that may people have - unfortunately , when dealing with multifamily situations , you don't get to inspect the property till you have an accepted offer which make it all the more important to include the " contingent on an inspection" clause so that you have the chance to look everything over carefully.
That's a shame what happened to your friend. I also found out the hard way that sometimes you need to followup and verify things yourself - I once found out that the most of the piers in the entire foundation was either destroyed by pest/mold , was leaning off to one side , or entirely missing in some cases - this is after we had already added a new roof and an AC system including ducting - we had to jack up the house and replace them all one by one - it added a few thousand to the job and was very stressful for everyone -we fired the original contractor as a result of that and many other issues which I will elaborate on later.
If you don't get to inspect the property until you have an accepted offer, then it would be paramount that you have contingency clauses. You wouldn't just go dropping offers on any property because the inspection costs would add up, but then you're at least serious about the property, but you have an out if it's not a good one.
Yeah, they got burned good. I feel bad for them. I think they were able to get things fixed, but they had to eat the cost.
You found that most of the piers in the foundation were missing?! That's insane! Seems like something that should have been caught in the inspection. That sounds like quite the story. Hopefully you were able to make your money up later.
Hey man, after a long time. How are you doing?
I'm doing well - thanks for asking.. I have recently changed real estate brokerages and have been busy with changing over everything and getting my CRM software and web page set up - getting new business cards and signs - going to lots of training meetings and classes - I've been missing Steemit and have been feeling a pull to come back and post up and peak around to see what others have been up to. Plus we've had family over and I've been distracted.... it's good to see some familiar faces are still here.
I checked your account frequently and was wondering why you are not posting as much as you used to. Good to know that you are well and setting up your business.
your doing some awesome stuff for the community ...you are really talented and you put it good use - talent that i'm sure took years of developing and honing .. I appreciate the shout you gave me a while back - once again - shows what class you have - Congrats on getting interviewed and featured... I'm sure your stellar rise will continue. Have a great weekend!
Thanks man. You were one of the reasons I didn't leave Steemit. Your initial support inspired me. You too have a great weekend.