Charlie Fuller explains that termite reports are actually Wood Destroying Organism reports covering fungi, dry rot, foundation damage, and moisture. Buyers should verify the inspection date and scope, check that repairs were completed, and attend their own inspection to compare findings.
Hello and welcome. This is Charlie Fuller, real estate coach and investor with the Dean Graziosi Real Estate Academy. Today this podcast is going to be called Termite Inspection is a Misnomer. A person who was looking for some property had this question. Some of the houses I looked at have a binder with a termite report inside. When I read them, they sometimes mentioned termites or even beetles, but a lot of times they talk about fungus and even the foundation. It's kind of strange for the termite inspector to look at the foundation, isn't it? The answer is the termite report, or might call pest report, really is a misnomer. In many states, the termite report's formal title is the Wood Destroying Organism Report. Quite a mouthful. That's why people typically refer to it as the termite report. Now, as you've discovered, these inspections are not limited in scope to just the termite and even pests, but actually search for any organism or condition with the potential to destroy wood. Members of a Home no home buyer can make a fully informed and final decision about what they should pay for a property without knowing as much as possible about the condition of the home. Traditionally, the buyer and the seller negotiate a price and terms. Then the buyer hires an inspector to ascertain the condition of the home, and then the price and terms would need to be renegotiated to resolve any condition issues. Now, in a growing number of geographic areas, smart sellers are providing information like pest reports and even home and roof inspection reports in advance of an offer being made, just to avoid surprises and renegotiation during the inspection period. A report obtained by a seller prior to your presentation to the offer on a particular piece of property can provide useful information, but does not necessarily preclude the need for you, the buyer, to obtain your own inspection once you are under contract. Now, there is a legal principle called privity, P R I V I T Y privity of contract, which basically means that an inspector who is paid by the seller does not actually owe you any legal duties if you rely on their report to your detriment. In other words, you could buy a house and find out the inspection missed some sort of infestation. They owe you nothing because they had no relationship with you. So basically, under the law, you must contract with the inspector and pay for the report in order to be able to later make a claim against the inspector's warranty for an erroneous report. Now, more importantly, there are inspection companies in every market who are known to write what we call light reports, which construe everything they see in the direction of the property being more problem free than it actually is. Now there are also inspection companies who make the most of their money from doing the repair work and so they may have a conflict of interest in the direction of finding needed repairs that other inspectors would disagree that are actually needed. The majority of reputable inspectors are straight shooters. It is recommended that you ask your Realtor how much credence they assign to the reports that the seller has already obtained depending upon the company that performed that inspection. Bottom it's tempting to forego additional inspections when the seller already had some conducted. You may need to spring for another set of a company that is responsible to you during your inspection and contingency period. On occasion if the seller has used an inspector I strongly trust. In other words, if this is some that the realtor strongly trusts them and maybe you do from some referral, then it's advised that you might pay that same inspector just to come out and do a site visit and walk through the report pointing out all the findings in person. Many companies will do this and create a legal relationship with the buyer for the buyer's protection without charging the full inspection fee. Now, Wood Destroying Organisms and we're going to refer to that as wdo. Wood Destroying Organisms inspections cover all sorts of things that are not intuitive but are involved in the destruction or decay of wood, including but not limited to mold, fungus, plumbing and roof leaks, dry rot, foundation, drainage and grading issues, and finally the wood destroying pests. So when you get serious about a property that has a WDO report available for your view, here are four things we recommend you do. First, note the date, the scope and any exclusions listed in the report. The seller may or may not have had the fence, outbuildings or the deck inspected and you need to know how thorough the inspection was to start to get an understanding of how seriously you should take that report. 2. Note whether any of the work recommended has already been done. Several times buyers look at the dollar amount of the repair, bid on a WDO report and flip all the way out on further review of the disclosure package, the seller have actually already completed most or say all of the recommended repairs and were actually trying to use this fact as a selling point. The third point note the inspection company. Again, ask your realtor if they are familiar with the company who performed the inspection and if so, whether the inspector has any notorious leanings or a reputation for fairness. Lastly, four show up to your own inspection and ask questions. Once you are under contract, attend your inspections in person. Ask the inspector to show you any problem areas on the building. Take the report that the seller had obtained and ask your inspector to compare and contrast. Now, sometimes your inspector may be tipped to something he didn't see. Or sometimes you're going to learn that the original inspector missed some things. So I hope this has been helpful. Until next time, this is Charlie Fox.
