Termite History & Property Value: Impact on Home Sales

Typical Value Impact

Active infestation (untreated):

• Can reduce value 10-20% or more
• May prevent financing approval
• Buyers often demand treatment before closing
• Negotiating leverage shifts to buyer

Previous infestation (properly treated):

• Minimal to no impact if well-documented
• May reduce value 0-5% depending on market
• Good documentation can actually reassure buyers
• Active warranty adds value

Structural damage (repaired):

• Impact depends on extent and quality of repairs
• Professional repairs with permits minimize impact
• Undisclosed damage can lead to legal issues
• May affect appraisal value

Factors That Influence Impact

• Local market: High-demand markets less affected
• Regional prevalence: Common in area = less stigma
• Property type: Older homes expected to have history
• Documentation quality: Complete records reduce concern
• Treatment recency: Recent treatment more reassuring
• Warranty status: Active warranty valuable to buyers
• Damage extent: Cosmetic vs. structural matters

Legal Obligations (Vary by State)

Most states require disclosure of:

• Known active termite infestations
• Previous termite damage (even if repaired)
• Previous termite treatments
• Structural repairs due to termites
• Active termite warranties or contracts

Timeframe varies:

• Some states: Any known history
• Others: Past 3-5 years
• Some: Only if asked specifically
• Check local requirements with real estate attorney

What Must Be Disclosed

Active issues:

• Current infestation (known or suspected)
• Visible damage
• Ongoing treatment
• Recent inspection findings

Historical issues:

• Previous treatments (dates, methods)
• Past damage and repairs
• Previous inspection reports
• Warranty information

What you don't need to disclose (generally):

• Issues you genuinely don't know about
• Very old history (beyond statute of limitations)
• Preventive treatments (no infestation found)
• Note: "Don't ask, don't tell" is risky—consult attorney

Consequences of Non-Disclosure

• Buyer can sue for damages
• May be required to pay for treatment and repairs
• Possible rescission of sale
• Real estate license issues (for agents)
• Criminal fraud charges (in extreme cases)
• Difficulty selling to future buyers

Bottom line: Full disclosure protects you legally and builds trust

Before Listing

1. Get pre-listing inspection:

• Identify any issues before buyers do
• Address problems on your timeline
• Demonstrate transparency
• Avoid surprises during buyer inspection

2. Treat active infestations:

• Complete treatment before listing
• Get warranty if possible
• Document everything
• Allow time for treatment to work

3. Make necessary repairs:

• Fix structural damage properly
• Use licensed contractors
• Get permits if required
• Keep all receipts and documentation

4. Gather documentation:

• All inspection reports
• Treatment records and invoices
• Repair receipts and permits
• Warranty documents
• Before/after photos

During Sale Process

Disclosure best practices:

• Disclose early (in listing or first showing)
• Provide complete documentation upfront
• Be honest about extent and timeline
• Emphasize treatment and repairs completed
• Highlight warranty if available

Pricing strategy:

• Price competitively if recent history
• Consider small discount vs. losing buyers
• Emphasize other property strengths
• Be prepared to negotiate

Marketing approach:

• Frame as "fully treated and warranted"
• Emphasize preventive measures in place
• Note that termites are common in area (if true)
• Highlight quality of repairs

Negotiation Tactics

If buyer requests concessions:

• Offer to pay for new inspection
• Provide extended warranty
• Credit for preventive treatment
• Price reduction (last resort)

What to avoid:

• Hiding or minimizing issues
• Refusing reasonable inspection requests
• Being defensive about history
• Incomplete documentation

Evaluating Termite History

Questions to ask seller:

• When was infestation discovered?
• What species was identified?
• What treatment was used?
• Who performed treatment (company name)?
• What repairs were made?
• Is there an active warranty?
• Have there been follow-up inspections?
• Any recurring issues?

Documentation to request:

• All inspection reports
• Treatment contracts and invoices
• Warranty documents
• Repair permits and receipts
• Photos of damage and repairs
• Follow-up inspection results

Independent Inspection

Always get your own inspection:

• Don't rely solely on seller's report
• Use different company than seller used
• Request thorough inspection of all accessible areas
• Ask inspector to verify previous repairs
• Get written report with photos

Red flags to watch for:

• Incomplete or missing documentation
• Treatment by unlicensed company
• Repairs without permits (if required)
• Recurring infestations
• Extensive structural damage
• Seller reluctance to provide information
• Inconsistencies in timeline

Negotiation Strategies

Reasonable requests:

• Seller pays for new treatment if needed
• Credit for preventive treatment
• Extended or new warranty
• Repair credit for structural issues
• Price reduction based on estimated costs

When to walk away:

• Extensive undisclosed damage
• Active infestation seller won't treat
• Structural integrity compromised
• Recurring infestations despite treatment
• Seller unwilling to provide documentation
• Repair costs exceed your budget

Lender Requirements

FHA loans:

• Require termite inspection in some states
• Active infestation must be treated before closing
• Structural damage must be repaired
• May require evidence of treatment

VA loans:

• Termite inspection required in most areas
• Active infestation must be treated
• Seller typically pays for treatment
• Damage must be repaired to meet minimum standards

Conventional loans:

• Inspection not always required
• Lender may require if appraisal notes issues
• More flexibility in negotiating repairs
• May still require treatment before closing

Appraisal Impact

• Active infestation can lower appraised value
• Structural damage affects value assessment
• Well-documented treatment/repairs minimize impact
• Appraiser may require pest inspection
• Low appraisal can affect loan approval

Types of Warranties

Treatment warranty:

• Covers retreatment if termites return
• Typically 1-5 years
• May include damage repair (read carefully)
• Requires annual inspections
• Often transferable to new owner

Damage warranty:

• Covers cost of damage repairs
• Usually has dollar limit ($250k-$1M)
• More expensive than treatment-only
• May have deductible
• Transferability varies

Warranty Value in Sale

• Active warranty reassures buyers
• Transferable warranty adds value
• Can offset concerns about history
• May help with financing approval
• Demonstrates ongoing protection

Transfer process:

• Contact pest control company before closing
• Verify warranty is transferable
• Complete transfer paperwork
• May require transfer fee ($50-200)
• Provide warranty documents to buyer

High-Risk Areas

Southern and coastal states:

• Termite history very common
• Less stigma attached
• Buyers expect inspections
• Treatment often routine
• Minimal impact on value if treated

Lower-Risk Areas

Northern and dry climate states:

• Termite history less common
• May cause more buyer concern
• Documentation more important
• May affect value more significantly
• Thorough explanation helpful