Sarah Seitz thought she had purchased her dream home. What she found when she moved in resulted in a two-year battle in court: massive termite damage that had been intentionally concealed by the seller and unreported by the contractor that performed the termite inspection. The courts eventually awarded her $68,000.

A case out of Minnesota tells a similar story: Joseph and Creaestia Hall sued the seller of their home, who – after conducting an inspection of the house by his own pest control company – failed to disclose extensive termite damage that was discovered by the couple a month or so after moving in.

In most cases, the liability for damages rests with the seller of the home. But a lawsuit filed in Michigan raised questions about whether the real estate agent should be held responsible, too.
Richard and Stacey Roberts’ case went all the way to the Michigan Supreme Court, which upheld an order for $86,000 in damages. This time, the court found the agent representing the seller not at fault, saying sellers must knowingly withhold information from buyers in order to be liable. But the damage to the selling agent’s reputation was done…

Termites cause an estimated $1.5 billion in property damage each year in the southwestern United States alone. In California, where termite infestation is among the worst in the U.S., more than 17 different species have been identified. How can you, as an real estate agent, avoid problems that could harm your reputation?

“When it comes to termite inspections, there are three easy rules to follow,” said David Taylor, technical and safety director for Antimite Termite and Pest Control, a fully licensed pest control company doing business in Southern California since 1941. “Hire the right company, get the work done early, and negotiate for follow-up treatments and guarantees.”

• CHOOSE A REPUTABLE COMPANY: Be sure the company you select is licensed and bonded. Check out references, and ask whether they perform follow-up inspections and guarantees, which will help ease concerns of the buyer.
• ORDER THE INSPECTION EARLY: Allow yourself at least three weeks to get the inspection and treatment, this will provide a cushion of time to address unanticipated problems or delays.
• NEGOTIATE FOR FOLLOW-UP INSPECTIONS AND GUARANTEES: Termites don’t die immediately. Sometimes, at no fault of the contractor, a treatment fails to get at all the insects. Most reputable companies will offer return inspections and retreatment of affected areas at no additional charge. They also offer service agreements that can ease the concerns of tentative buyers.

What happens if the contractor breaks something in the process of treating the home? What if the company’s repairs are not to the buyer’s liking?

• SPELL IT OUT IN THE CONTRACT: Be thorough in having the contract with the pest control company specify what damage the company will be liable for. If the contractor is resistant, seek out another company. Determine whether the buyer, seller or both will cover other possible damage. Specify a dollar amount to allow the buyer to pull out of escrow if repairs are excessive.

Termites are among the most destructive insects on Earth. They can break an escrow transaction, render a home uninhabitable, and damage an agent’s reputation.

Don’t let this happen to you. Insist on hiring only best when it comes to your next termite inspection.