One of the biggest mistakes I see time and again is a Seller listing their home for sale, accepting an offer, going into escrow, and then finding out they have termites with thousands of dollars for repairs. This can easily be avoided by first ordering an inspection from a reputable termite company before listing the home for sale. The Seller will then know how much money will be required to get the termite clearance of section 1 items.
The vast majority of real estate offers in Southern California have attached a Wood Destroying Pest Inspection and Allocation of Cost Addendum,or WPA for short. The form is produced by the California Association of REALTORS®.
Standard practice in Southern California is to ask the Seller to correct all Section One items, while the Buyer takes on the responsibility of Section Two Items.
Simply put, Section One items include active termite infestation and dry rot, while Section Two items include conditions likely to lead to infestation. An example of a Section 2 item would be a covered patio wood post that was secured directly into the ground.
If a Seller agrees to an offer with the WPA requiring Section One Clearance at the expense of the Seller, they have just written a blank check for an unknown expense. Many times, a Seller is surprised when they have negotiated a lower price than preferred and then find out they have a $5,000 bill to provide Section One clearance.
Another advantage of the Seller ordering the Termite report is they can now control who the Termite Company will be that provides the clearance. Again most WPA’s will simply state, Seller’s Choice or Buyer’s Choice. The problem most common is a second termite report and bid come in much higher or lower, the Seller wants to use the lower bid, the Buyer wants to use a higher bid. If the Seller attaches a termite report and Company to provide section one clearance this discussion will not happen since it has already be contractually decided who will perform the clearance.
I always recommend my Clients to take this simple step and save themselves grief later in the transaction. It is the small details from an experienced agent that will make a big difference in the representation of their Clients.
