April 1, 2016 in Real Estate

Termite damage doesn’t automatically mean you can’t buy the house

Many for-sale homes have some damage caused by termites or other wood-destroying insects. But “some” isn’t the same as “a lot.” That raises a question for homebuyers: How much damage is too much?

Mike Merchant says he wasn’t too concerned about the presence of active termites when he bought his home in Dallas. Merchant is an entomologist, a scientist who studies insects, for the Texas AgriLife Extension Service, a public education arm of Texas A&M University. He runs a blog about urban entomology called Insects in the City.

“As far as I knew,” Merchant says, “our house didn’t have structural damage. We’ve done some remodeling since then, and there was some damage to showers, but nothing that would have caused the house to fall down around us.”

There’s a limit, though

Still, Merchant knows a lot about wood-destroying insects, and he says he can envision a house with so much damage that he’d think twice about buying it.

“There certainly are homes that have been damaged pretty severely,” he says. “If a home inspector says, ‘I’m seeing termite damage in a number of different places,’ or, ‘There are active termites, and they haven’t been treated for a while,’ I’d be worried about buying that home.”

RATE SEARCH: Ready to shop for a mortgage? Find the best deal today.



Douglas Webb, manager of technical services for Terminix, a national pest inspection and control company in Memphis, Tennessee, says homebuyers should hire a pest control inspector to prepare a report, even where it’s not required by state law.

A report can show whether wood-destroying insects might be present, and, if so, what types and where they are. Identifying species is important because not all insects are alike.

For example, the Formosan type of termite has huge colonies and can damage a home much more quickly and severely than the more common eastern subterranean type, Merchant says.

Informed decision

And what’s more, he adds, termites are “very treatable” while carpenter ants can be “notoriously difficult to totally eliminate.”

The presence of a problem “doesn’t mean necessarily that you shouldn’t buy that house,” Webb says. “It means you need to understand how extensive the issue is. Make an informed decision by having a good report and getting experts to look at the damage.”

RATE SEARCH: Selling your house and buying another? Find the best mortgage deal today.



Even with inspections and reports, it’s not always clear how serious an infestation is or how badly a home has been damaged. That’s because pest inspectors look only for evidence of wood-destroying insects and organisms, and home inspectors look for damage only to the home’s visually accessible areas.

“Pest control companies are qualified insect experts, so they’re just reporting about whether or not the insects are there,” Webb explains. “The amount of damage would be determined by a contractor or building expert.”

A knowledge gap

This division of duties and the limitations of inspections can leave gaps, and sellers might not allow further, more invasive investigations.

What’s more, it’s reasonable to assume that if inspectors find evidence of wood destruction, there’s probably more there than what is visible. Insects often feast inside walls, out of sight.

“You should always presume that (there’s more damage), even there’s a small amount of evidence,” Webb says.

RATE SEARCH: Get prequalified for a mortgage today.



The extent to which a pest problem affects a home’s market value also isn’t clear since otherwise recently sold homes that are comparable might or might not have similar issues.

Rich Paddock, owner of Paddock Appraisal Service in Modesto, California, says buyers “typically penalize the seller for the cost to cure,” or fix, a home’s known defects.

If a fault lies in a particular house, rather than all or most of the houses in the area, that house could acquire a stigma, and that stigma could carry forward to the next buyer as well, if memories are that long.

Eventually, though, “buyers forget,” Paddock says. As soon as a known prior defect is no longer mentioned in connection with a home, the stigma can lose its market power.

What appraisers do

Appraisers don’t take much interest in wood-destroying pests, says Michael Cibene, owner of Michael’s Appraisal in Oakland Park, Florida.

Termites are common in the area, yet Cibene says he’s never seen one up close. If he finds evidence of pests, he’ll check a box on his form and recommend an inspection.

“Years ago, I wrote ‘termite damage’ on a house (appraisal) and the (loan) underwriter said, ‘Are you an inspector? How do you know they weren’t carpenter ants?'” Cibene says. “It’s really not an appraisal issue.”

Termites aren’t the only culprits. Read about 7 dreadful pests that devour houses.

RATE SEARCH: Shop today for a mortgage.



Whether the seller or buyer pays for eradication of insects and repairs to the damage they’ve caused is another open question.

“If your building expert says the home has some serious damage and the seller is refusing to pay for it, you have to get a price from a contractor, and then negotiate,” Webb says. “Everything is a negotiation right down to the point of saying, ‘I’m not going to buy this house.’ Because once the house trades hands, it’s now your problem.”

Read about mortgages that pay for home renovations.

Some pest companies offer a guaranty, warranty or maintenance program to help mitigate the risk of future infestations or damage. Buyers should ask what’s covered and what’s not, how long the protection lasts, whether the plan can be renewed and if so, at what cost.

RATE SEARCH: Ready to shop for a mortgage? Find the best deal today.