I’m feeling a little like a home buyer or seller today. You have a lot of choices. As an agent, I know this, but I also know the differences. More than occasionally, I find myself wondering, “Why did they hire them?” To me, an insider, the differences are so obvious, and the best are so easily picked from the litter. Today, I am getting it. Maybe the certifications were there, the rhetoric was satisfying and the years of experience were compelling. Not being one who lives and breathes real estate, I can understand the confusion you must feel.
Take pricing a home for sale. Pricing a home, even estimating probable sale price and market time, is not a precise science. Ask a dozen agents, and I can pretty much guarantee that you will get as many different answers. If you are relying on others to consult and to advise, I can appreciate the confusion you must feel, especially when the others can’t even agree among themselves.
As a home buyer or seller, you rely on us to guide you through the process. As your agent, we also must rely on others throughout the transaction to perform duties for which we are unqualified. This week, I found myself confused.
We have a seller client whose home is in escrow in Scripps Ranch. It is on final approach, actually. During the initial days under contract, we did what we always do. We ordered the Wood Destroying Pest and Organisms inspection. You know this as the Termite Inspection.
Now pricing a home is one thing. Your agent is having to rely on his knowledge of the market, of buyer and seller attitudes, of economic predictions, of seasonal trends and a multitude of other factors — to predict human behavior. No one can argue that this is an exact science. But, in the case of a termite inspection, one would assume (one being me) that it is extremely scientific. You either have a wood destroying pest or you do not. The holy grail of the pest inspection process is the “clearance,” and this clearance will say something along the lines of “the property is now free of evidence of active infestation.” Easy enough, but not so fast.
The State of California regulates structural pest control firms, and firms making household treatments must be licensed by the California State Structural Pest Control Board. Licensing is required to ensure, among other things, that firms practicing inspection and treatment will be thorough, honest and accountable. We have worked with dozens of firms in San Diego over the years and, with very few exceptions, we have found this to be the case. But, what do I know? I don’t know termites, that much is certain.
So, back to our seller’s home in escrow. We had the home inspected by a big, reputable firm. Here is the series of events:
- Big Reputable Firm came back with findings of evidence of termite infestation. The report called for fumigation of the structure. Fumigation will typically run from $2500 to $3000 or more, depending on the volume of the “box” and, of course, the company.
- The seller asked for a second opinion. Every penny counts; it always does. Smaller, Company #2 came back with a finding of no evidence of active infestation, but did identify several wood members on a patio cover (wood rot) requiring replacement.
- Big Reputable Firm was called back out for a second look. This time, I joined the inspector in the attic. The “dozen or so” termite wings (evidence) that the inspector previously noted were no longer present. Were they disturbed? There is no way of knowing for sure. Now she sees them; now she doesn’t. Oh, and the wood rot isn’t really wood rot, in her opinion, but now that I’ve brought it up, it should probably be noted.
We suddenly find ourselves with several issues, issues of “he said, she said,” but they all must be disclosed to the buyer. First, we have a report saying the home has termites but no wood rot. Next, we have a report saying the home has wood rot but no termites. Keeping in mind that I am in no position to make the call, as I wouldn’t know a termite wing if it landed in my coffee cup wearing a name tag, I find myself and on the behalf of my clients in the position of having to rely on the professionals. Meanwhile, the buyer’s inclination is going to be, “We will take all of the above.”
Every day in this business I learn something new, and this was a valuable continuing education. I challenged the Big Reputable Firm, of course, and here is the explanation I got. It seems that there was evidence that the home had been previously “locally treated” for termites in one portion of the attic. Forgetting the mystery wings, given the knowledge of previous treatment in concert with the age of the structure (mid-’90s), she told me that calling for a fume was automatic. “Local treatments are substandard, I can’t guarantee the work of others, and given the circumstances, there is a reasonable likelihood that termites are present.” Suddenly, I am thinking that pest inspectors are inspecting not with eyes but with actuarial tables. And, the reality is that the $75 inspection fee does not cover their gas and time; the repair work constitutes the business, the profit margin, their french fries.
We found a middle ground, fortunately, that satisfied both the buyer and seller. Both findings had to be disclosed, but all parties (and Big Reputable Firm) agreed to spraying the entire attic versus fumigation at approximately one-third the cost. And, yes the wood rot which is (and isn’t) present is being addressed.
This discussion really only raises questions, and I am not sure I have the answers. It is a delicate dance. When more than one inspection is performed, you may overcome one issue yet raise another, and all must be disclosed. The buyer will typically want the most comprehensive solution, while the seller will want the least expensive. One thing I do know is that at the next termite inspection and at every one thereafter, I am going to be poking my head in the attic.
Ah, the glamour of real estate.
ABOUT THE AUTHOR Kris Berg is Co-Owner and Designated Broker of San Diego Castles Realty. If not-so static web sites are your thing, go here at once where you will find loads of real estate information including homes for sale, market trends, floor plans and more. Kris's hobbies include fencing and spot welding. She likes kittens. 
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{ 9 comments… read them below or add one }
Good information. Thanks!
Question: What inspections are or are not common on plumbing systems for older houses during a transaction?
So here was a fun moment …
Since the nine termite tubes discovered in the garage of a home my buyers were purchasing (and still are, thanks to a full treatment sans fumigation) I’ve been on the lookout for the critters.
Guess what I saw to the right on the entryway when I dropped my daughter off at her mom’s tonight? Yup … a lovely termite tube. Darn near picture perfect.
Daughter freaked out, thinking the termites were going to eat her alive. Ex-wife seemed a little annoyed … gave her some names of some contractors, suggested she get them treated before the one becomes a dozen.
Hope she does. I’m kinda partial to the house since I helped pick it out once upon a time.
This exact story just happened to me a week ago. My ending was not so happy. My buyers were so frustrated by the process they went out and signed a lease on an apt for a year. I had been taking them out for almost 5 months. The sellers after being told that they were going to have to disclose all this information took their house off the market.
I always preferred math to the arts. I like it when there is a right answer and a wrong one. All that darn subjectivity can get in the way. Who knew that the science of the pest inspection was so subject to interpretation? In your case, Jonathan, it doesn’t sound like there was any question. What I still don’t understand in my case is how one would say they could only issue a clearance after a fume, not because of hard evidence, but because of “a feeling.”
Greg – Bummer.
Sven – Don’t tell me you went a bought a house.
Typically, the general property inspector will be able to identify issues which may exist with your plumbing. They will test for evidence of moisture, leaks, and such. If the older home has a raised foundation, they will crawl underneath (a job you couldn’t pay me enough to do) and visually inspect the pipes there. The problem is that no one can crawl through the walls – not you, your inspector, or the agents. So, absent evidence that a problem exists, you will have to assume that the plumbing is serviceable (working). If you do see signs of moisture or other issues, as a buyer you can take the next step and call a specialist that deals with these things. Depending on your concerns, they can send their little scopes on a trip through the pipes to look for blockages and breaches.
Do you have any particular reason for concern, or is your concern just circumstancial (age of home) as well?
“One thing I do know, is that at the next termite inspection and at every one thereafter, I am going to be poking my head in the attic.”
Translation – I think we all know who will be the “attic rat” for future termite inspections.
All of this makes me glad I live in Boise where we don’t have termites.
(the Pythons eat ‘em!)
But, the Pythons aren’t a problem either.
(cuz the Grizzlies eat ‘em!)
Kris – Not yet
I’ve been to a few open houses, and I got my eye on a house that I may take a shot at in a couple of months. Thing is, I’m adamant about not buying into a HOA, and pretty much all the newer homes are part of one. I just don’t like the idea of someone fining me for leaving my garage open and telling me what color I can paint my house. (and I’m fortunate enough to pay them for this “service”) I was renting in a complex once where the HOA just didn’t like me for some reason and they began accusing me of random things that I had nothing to do with.
Anyway, make a long story short, pretty much this narrows down my selection to “old” homes (as in about 50 years old). Then I’d like to live west of the 5, south of the merge, north of downtown, and I’m not going to pay 2005 prices. So this reduces my selection to like… 3 houses. I love the character of older homes, but I just want to make sure I don’t buy something where I’ll end up ripping out the plumbing 6 months later.
Incidentally, the investor groups that back the jumbo loans just updated their guidelines for San Diego (as we are a “super-distressed” area) to 85% LTV or better on anything over $417k. We really are heading straight for 20% down again.
Sven,
And speaking of termites…
Some areas are more “super-distressed” than others, of course. On the down-payment subject, it is true that lenders are going back to higher downs and full-doc loans. It’s called risk averse, and I don’t think this is a bad thing. However, don’t forget the FHA loan opportunities – 3% down plus a 1.5% loan fee which can be included in the loan amount. FHA doesn’t work for every attached product, but it does for single-family. We are also seeing a resurgence of VA financing.