The due diligence phase that comes along with buying a home is a stressful time. Not only are you digging into researching the title, making sure there aren’t any liens or first positions on the home, but you’ve also got to worry about inspections. But which inspections should you get? You can go for the standard inspection or add extra specialists to look for mold, radon, termites, etc. All of these inspections can rack up your costs, but are they your costs…or the sellers? Just who is responsible for a termite inspection when buying a home anyhow?
The buyer is responsible for all inspection costs, according to most standard purchase contracts. In exchange, the seller must open the home for these inspections to occur. The buyer will also be liable for any damages caused during the inspections, but not for the actual issues discovered.
But we’ll get into all of that in a second. First, let’s talk about when you want to get a termite inspection and what that process will look like. Plus, I’ll dive into what other costs you might be on the hook for once the inspection occurs. Let’s get to it!
The Process of Buying a Home
While there may be some wiggle room here and there, the process of buying a home is pretty standard across the United States.
- The seller lists a home for sale.
- An interested buyer makes an offer.
- The seller either accepts or rejects the offer.
- If the offer is rejected, the buyer can counter and start the process over again.
- If the offer is approved, the home is put under contract, and the buyer puts down a small amount of earnest money to secure their spot.
- The contract will have clauses for blocks of time where the buyer must:
- Have inspections done
- Have title research done to ensure there aren’t any outstanding liens or first positions
- Get an appraisal done
- Secure loan financing
- Once the deadlines have passed, the contract moves into the closing phase.
- Money is transferred to the seller.
- The title is transferred to the buyer.
- The buyer owns the home and begins making mortgage payments to the lender.
During the due diligence phase, the potential buyer will get all of the inspections and research done they feel is necessary. A standard inspection is always recommended and it’s best if you’re there during the inspection. That way, you’ll have the chance to ask the Inspector questions, see what they notice, and have enough information that you’ll feel comfortable knowing if you should proceed or walk away.
In addition to the standard inspection, you can get other extra inspections that dive deeper into what’s going on inside the home. Most buyers will get an additional radon inspection, especially if they live in an area that has high radon levels. Though not necessary, you can also bring in specialists during this time to look for mold, termites, or other potential issues. Believe me, if you can think of it, there’s probably someone you can pay to check it out.
Your general inspector may point out obvious signs of termites, but they’ll rarely do a deeper dive. If you want to be extra careful, you’ll need to hire a termite specialist to give your potential new home a thorough once over. If possible, try to find someone who doesn’t come through either your real estate agent or the buyer. Finding an outside specialist ensures that there aren’t any conflicts of interest and that you get the most unbiased opinion possible.
Why Should I Be Worried About Termites?
Are termites a big enough issue that you should get a specialist? It depends. It’s not required, and to be honest, many buyers will opt out if their inspector hasn’t noticed any signs of termites. That said, if you want to have a thorough understanding of what you’re buying, I think it’s well worth the extra money.
Termites are bad news. They’re tiny little mites that love to eat wood and will often chow down on things like support beams, studs, wood flooring, and other tasty treats. Could they cause your home to collapse suddenly? Probably not, as long as they’re not able to reproduce and fester. They will, however, cause damage that can get very expensive, especially in older homes that may need to be retrofitted to meet new building codes. But honestly, even newer homes will cost a pretty penny to get rid of these pests. It’s best you save yourself the headache later by finding out what you’re up against now.
What if I Do Damage to a Home During a Termite Inspection?
During a termite inspection, your specialist may drill into walls to get a better idea of what you’re dealing with. They’ll be looking to see if there is an infestation and, if so, what size you’re looking at. Their report will also give you a rough estimate about how extensive the damage they’ve caused already is. Unfortunately, if they find enough of a termite infestation that makes you run for the hills, you’re going to be on the hook for any repairs to fix the damage.
But I should clarify something: You will be responsible for the fees associated with repairing the holes your specialist made, not the damage the termites caused.
If your specialist does find termites, you have a few options:
- Walk away from the home – As long as you’re within your due diligence deadline, you should be able to cancel the purchasing contract without penalty. If you’ve passed the deadline, talk to your attorney about what options you have. Don’t automatically assume you’re stuck with the house; there may still be a way out.
- Renegotiate the contract terms – You can go back to the seller with your report and ask them to either pay for repairs or lower the purchase price to cover your repair costs.
- Do nothing and keep the house – Depending on how competitive the market is and the extent of the damage, some buyers may opt to continue with buying the home as-is. This is also an option if the seller won’t negotiate the price.
Are There Times When a Seller Will Pay for Termite Inspection?
Like most things in life, the process of buying a home is negotiable. For the most part, the buyer will be responsible for any costs associated with inspections or specialist reviews. But there are times when you can negotiate having these costs covered by the seller.
If you’re in a buyer’s market where there is more inventory than buyers, you may have a better shot at getting your costs covered by the seller. You may also be able to negotiate your fees if you’re paying cash, but there are really no set rules about this. Remember that the seller is looking to get out of this cleanly and with as much profit as possible. If you can negotiate a compromise that still makes the seller feel like they’re coming out ahead, there’s a chance you won’t need to pay any inspection fees at all.
No one wants to find termites in their home, as the headache they cause both buyers and sellers can be massive. While you may be out the costs that come along with termite inspection, consider it money well spent to either give you peace of mind or let you out of a potentially expensive purchase.
Have you run into termites during an inspection? Leave a comment and let us know how you handled it.