Who Pays for Termite Inspections in FHA Loans?

Brandon Taylor
Brandon Taylor
Published on July 18, 2018

 

Warning: We’re about to give you the creeps.

It’s termite swarming season – that time of year when subterranean termite populations within colonies reach the carrying capacity and they swarm out in search of new digs.

Although they may start out underground, a few strategically constructed and placed mud tubes will allow them entry into the home.

They can also gain access to the home through wood that is in contact with the soil. This includes porch steps and supports, doorframes, deck supports and more, according to the pros at Orkin.

Evidence of an infestation can throw a real estate transaction into turmoil. The homeowners may be clueless about it and it scares the daylights out of the buyer.

Termites aren’t a problem in many parts of the country, butthey are in Alabama.  So you’ll naturally want to have the home inspected by a pest control expert before purchasing (most mortgage companies require it). If you’re using an FHA-backed loan, get to know its policies when it comes to pest inspections.

What FHA has to say about it

While some states, such as Nevada, require pest inspections, the FHA only requires borrowers to order a pest inspection under any the following circumstances:

  • If the FHA appraiser sees evidence of an active infestation.
  • If state or local jurisdictions mandate the practice
  • If wood destroying pest inspections are customary in your area
  • If the lender requests one

So, what does the inspector look for?

 

  • The mud tubes mentioned earlier are one indication of an infestation. For several reasons (access to a food source is one), termites construct these tubes from the soil to wood. Sometimes the inspector has no trouble finding mud tubes. Sometimes, they are hidden inside walls, behind the homes baseboards, under the floors and behind walls.

Check out Orkin’s website to learn more about mud tubes and to see photos to help you identify them.

  • The inspector will also look for termite wings. Like moths, termites may cluster around light sources, so one sign of an infestation are their wings littering windowsills or stuck in cobwebs.
  • The inspector may check any wood structures on the property, such as fencing, wood mulch in the garden, firewood stacks and wooden structures.
  • They also may look inside at the drywall. The termites do not damage the drywall directly but when they construct their mud tubes they can make the drywall stick out.
  • Termite damage is a sure-fire sign of an infestation, so the inspector looks for evidence of such on wood surfaces, such as floors.

Who pays for the inspection?

Although FHA doesn’t care who pays for the inspection, and it is a negotiable item, whether the seller or the buyer traditionally pay for it varies by region.

In the standard Huntsville Area Association of Realtors Financed Sales Contract.  There is a paragraph that requires an Alabama Wood Infestation Report at the cost to the buyer, so this is what is most common, but everything is negotiable.

What if an infestation is found?

The Official Alabama Wood Infestation Report is broken down into two parts, Part A and Part B. The former includes a report of active infestation and damage — items that must be remedied now.

Section 2 items are those that may lead to an infestation in the future.

If you have any concerns about wood destroying pests in a home you are interested in purchasing, have the home inspected. The national average cost of the inspection is $537, according to homeadvisor.com.

The national average cost for termite treatment, however, varies according to the scope of the problem, the size of the home and other factors. Plan on paying between $1,150 and $3,300, according to costhelper.com.

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