San Diego Housing Bubble News and Analysis

When I lived in San Francisco it was common for sellers to do this. If it was an older home it removed a barrier to getting offers (if a reputable company performed the inspection). No buyer wants to make an offer on an older home, pay significant money for a pest inspection (termites, mold, dry rot, etc)and then have to walk away because the seller won't clear the report. Seller's agents encouraged sellers to do this so that deals were less likely to crash & burn.

The seller typically pays for the inspection (actually most companies will do them for free). I often order them beforehand to know if there is an issue and how expensive it would be to address it. As a seller you are typically asked to provide termite clearance as a condition of the sale. When you agree to do so without knowing the extent of the problem (if there is one) you are signing a blank check. It's a good idea to do it upfront. Eliminates unpleasant surprises.

Not altogether uncommon KIBU. Sometimes sellers wait until the get into escrow before they order the pest inspection. Other times they get it before hand to give the buyers additional information. Not a bad idea. If you were interested in the home and there was a copy of the the pest report sitting there when you saw the home wouldn't you be interested in that?

Generally termite inspections are free as well. In non distress sales the seller will pay for section 1 items on the report (damages due to infestation or sign of infestation) including wood rot. Buyer will pay for section 2 items. However in some distress sales the short sale lender will not pay for termite damages. Sometimes REO lenders don't as well but most of the time they will.

When I represent buyers, the seller generally pays for the inspection or the clearance (meaning inspection plus repairs).

If you order an inspection ahead of time, then as a seller you know what repairs are needed and so does the buyer.
This eliminates a large amount of the unknowns for a seller figuring out what he will net with an offer.
In this way, it helps a seller better evaluate the offers he receives.
If it is a short sale or REO, then (which are typically "as-is") then it helps the buyer determine whether or not this purchase is worth pursuing.

Also, generally termite inspectors cost less than $100 and bill out of closing (which means you don't have to pay them to come out unless the sale actually happens).

So it has a few upsides and not much downside.

Could you guess for some reasons why a listing agent would order termite report before mls listing?

Chiming in here. Both SD Realtor/sdrealtor/urbanrealtor are right.

Basically as a seller, you want the inspection done before MLS listing because it will give you time to remediate/fix any problem before the property goes to listing.

Inspection immediately after listing is a very bad time to try to do this because the first few weeks of a listing are critical (don't forget DOM). Trying to do inspection/remediation while MLS listed and having Realtors trying to visit the property is not a successful way to get the property sold. (ie: imagine having a Realtor coming to show the house.. and it is tented for termite fumigation).

Doing the inspection after sale, risks the sale. The buyer will probably make the sale contingent on the needed inspections (if they even want to deal with the potential risk of the property failing inspection). If these don't pass, you may loose the sale or the buyer may want a price adjustment.

Besides: doing it ahead of the MLS demonstrates to a buyer that the seller is really ready for a sale and is prepared.

Seller is generally expected to have all permits and inspections done. Not having them done can seriously impact the selling price of the house (due to buyer pricing in 'unknowns').

Thank you all for your helpful responses.

What really suprised me is how supper simple the termite report is. Mine has:

1. A sketch of a square box, didn't even indicate if they looked both upstair and downstair, just a square box.

2. Has the name of the inspector, license number, but next to it, no signature (maybe because they couldn't pull the electronic signature out?), should I be alarmed?

I will call the termite company tomorrow to ask them but since I didn't order the termite report, I wonder if the termite company will answer me. Will let you know. In the mean time, anyone alarmed by item 1 and 2 above ???

The report should say if it is limited or complete. If it is limited there is an indication of what was not accessible. The outline you mentioned is standard. Basically the inspector will outline the footprint of the home. Also check the report or ask the company if there was a deck or patio cover and if it was inspected.

Are you asking these same questions to your realtor?

No I would not be alarmed by 1 or 2.

Thanks SDR, I contacted my agent and asked him to send me again the report with signatures on it and he did. If the sketch is for the foot print then I think it probably cover the whole house (as represented by the square and a small balcony figure). the report checked "complete" so I think it's okay.

The bank (seller) is willing to put down 100 dollar for my termite inspection, it's will be my choice to use it or not...Given the info so far, I decided not to do a second inspection since the first one done by listing agent was a month ago by a license inspector.