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Should you buy a home with termite damage?

Wood destroyed by termites.
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Buying a house with potential red flags in a home inspection can give buyers some apprehension. But buying a house with significant termite damage? Well, that can be a terrifying deal-breaker.

It can also be costly. According to the National Pest Management Association, termites cause more than $5 billion in property damage each year. What’s more: these costs are generally not covered by homeowners insurance.

Before you’re completely scared off, know this: A home with termite damage doesn’t have to be a pariah. First, find out how bad the damage is, if it can be fixed and what an inspector recommends to rid the home of termites. Then see if you can negotiate a resolution with the seller. Here are some key considerations to keep in mind before you buy a house with termite damage.

Should you buy a home with termite damage?

Just because a house has termite damage doesn’t mean you should write it off. It depends on how expensive the damage is and what it’ll cost to remedy.

If you live in a region that has a high probability of termite infestation, such as California, Florida and Louisiana, you might come across termite damage. If the damage is caught early, it can often be fixed with minimal issues in some cases.

If you were planning to do extensive renovations, termite damage might actually be a bargaining chip.

Take Mike Kistner as an example. Kistner, a Realtor with PMZ Real Estate in Lodi, California, bought a home that had termite damage the seller disclosed before Kistner made an offer. The seller agreed to tent the home for termite fumigation before a home inspection. After all was said and done, the inspection report came back clean and Kistner says he was able to negotiate $2,500 toward his closing costs from the seller for minor repairs to avoid future termite infestations.

“Since I moved into home, everything has been fine,” Kistner says.

Glen Ramsey, a board-certified entomologist and technical services manager for Orkin says that termites don’t necessarily go away as easily as other types of pests. And that presents a challenge if you need to close sooner rather than later.

“Termites are cryptic, which leads to potential damage in areas that you’re unable to see,” Ramsey says. “Visible damage is usually not the full extent of it and can be dangerous because termite damage may be significant, both structurally and financially.”

In other words, you could be facing multiple structural damage areas and paying out of pocket for expensive repairs. That’s why it’s important to get a professional home inspection and, beyond that, seek the help of a pest professional, as well as a licensed contractor, to help you understand the extent of the termite damage. If possible, have these inspections done during swarming season, so you have a better shot at uncovering all of the damage.

Get a specialized pest inspection

Even if a seller discloses termite damage upfront, it may not be obvious how extensive the damage is or if there’s still an active infestation.

A standard home inspection won’t cut it; a home inspector typically looks at major components that are easily accessible. A pest inspector, on the other hand, will look specifically for evidence of termites and other pests.

“A home inspector may make recommendations for corrections to the property, if necessary,” says Ron Humes, a registered builder and principal broker at HomeSelect Realty in Lexington, Kentucky. “If there are serious issues, consider bringing in a contractor to assess the damage further.”

Once you get the inspection reports back from the professionals, you’ll need to decide whether to proceed with the purchase. Even if the damage is minimal, never assume you’re 100 percent in the clear once the home is treated.

“Make sure you discuss the risks with proceeding (with the sale) and have a reserve fund available to address any concerns that arise after the purchase,” Ramsey says. He recommends that homebuyers work with a pest management professional to decide on the best ongoing treatment plan. Also, you might want to look into what your homeowners insurance policy will and won’t cover when it comes to termite damage and consider specialty coverage, if necessary.

Negotiate termite damage repairs

Once you know about termites, the next logical question is who will pay for repairs and to send those pests packing? The answer isn’t so simple.

One way to protect yourself from the start is to include a home inspection contingency, which gives you a way out of the purchase contract without penalty if the inspection report uncovers major problems, Humes says.

Kistner agrees.

“When you find some termite damage during the inspection period, I’d submit an addendum requesting they tent the property,” Kistner says. “I’d ask the seller to get the termite damage repaired by a licensed contractor and provide receipts because not all (lenders) will let the homebuyer proceed (to loan approval) with termite damage.”

Since more damage can crop up as repairs are being made, make sure to delay the closing until everything has been taken care of.

Know the costs of termite treatment

The costs for termite treatment depend on how extensive the infestation is and how much damage was caused. Significant termite infestation treatment can set you back $1,200 to $2,500 or more, depending on the size of the house, according to HomeAdvisor. Structural repair costs will vary widely depending on location and the contractor’s experience, but expect to shell out a few thousand dollars or more if extensive repairs are needed.

If the seller isn’t willing to make repairs, then you can either walk away from the sale (with a contingency) or negotiate further. This can include getting quotes from licensed contractors and request that the seller provide the amount as a cash credit that can be applied towards your closing costs.

Bottom line

It can take extra time and effort when buying a house with termite damage, so make sure you’re ready to roll your sleeves up. Sure, it might be burdensome to get more home inspections or negotiate with a seller. However, the up-front costs and hassle pale in comparison to the debacle you could face later if termites continue to ravage your dream home.

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Written by
Sarah Li Cain
Insurance Contributor
Sarah Li Cain is an experienced content marketing writer specializing in FinTech, credit, loans, personal finance and banking. Her work has appeared in Fortune 500 companies, publications and startups such as Transferwise, Discover, Bankrate, Quicken Loans and KeyBank.
Edited by
Deborah Kearns
Mortgage reporter
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President, Real Estate Solutions