Inspection Fall Out

The new contract protects the interests of both buyers and sellers, said Georgia Association of Realtors (GAR) CEO Bob Hamilton. Both parties agree to a time period in which the buyer can arrange a host of inspections. Before that period expires, the buyer can walk away from the contract with his earnest money if not satisfied with the results.

It’s not that simple, explained Arrow Exterminators Realtor Relations Vice President Nancy DeLany. Many buyers believe a transferred termite bond eliminates the need for inspection. That guarantee doesn’t cover damage from powder post beetles, wood-boring beetles, drywood termites, or wood-decaying fungus, nor does it identify conducive conditions that can contribute to infestations, she said.

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Straight from the Source

Some buyers are told termites, if any, will be found by the home inspector, she said. Home inspectors are "not qualified to inspect for termites and wood destroying organisms. Home inspectors are not even licensed in the state of Georgia."

According to Harrington, "The language that’s in the contract is not real helpful to pest control operators." He said it doesn’t help consumers either. "Frankly, an inspection is a necessity, not a luxury."

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States Dropping Termite Inspections: No such thing

GAR agreed inspections protect consumers, and its agents counsel clients on their importance, said Hamilton. Georgia lenders, however, no longer require the Wood Infestation Report at closing, he said. "You can go to closing without a termite inspection letter and the lender could care less."

Jennifer Dickenson, real estate attorney and member of the Mortgage Bankers Association of Georgia Board of Governors, disagreed. She said inspections are "critically important" for buyers, a view shared by most lenders and lawyers.

Inspections are not, however, a financing requirement. Lenders had made the Wood Infestation Report a condition of loans because it was listed as a condition of purchase in the pre-printed real estate contract, she explained. So, when GAR took that requirement out of its contract, it no longer became an obligation to lenders. Dickenson reviewed GAR’s research on the subject and "they’re 100 percent right. The lenders never required it independently."

FHA and Veteran’s Affairs loans are different, and typically require the termite letter, she said. But most loans are conventional and provided by private lenders. These lenders look at the condition value of the asset and, more important, the financial fitness of the borrower, and are under no obligation to follow HUD guidelines, she said.

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"The industry is upset because under the old contract everybody got business. Under the new contract, they may or may not Get Businesss."

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Giaimo enlisted NPMA and Connecticut’s congresswoman to help make the case with HUD. In repeated meetings, HUD stated its requirements had not changed and that further clarification was unnecessary.

Both state associations are urging members to document cases where buyers have been burned. "We know there are cases out there," said Bell. A house that starts crumbling from insect damage, and the resulting lawsuit, will get the industry’s attention, said Roos.

Dickenson said it’s time for the industry to "rethink how they get the word out" on the need for inspections, because they’re "definitely an important tool." She suggested the industry "start partnering in a more meaningful way" with closing attorneys, lenders and real estate agents. Placing brochures in these professionals’ offices would help educate buyers, said Dickenson, principal of Dickenson Gilroy in Alpharetta, Ga. She encouraged professionals to join these groups’ associations, and develop relationships with people who can spread the word on the importance of inspections.

Real estate agents and mortgage companies have looked at the termite inspection as a potential problem to closing, Giaimo explained. "It’s hard for us to get them behind us."

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About HUD

The Georgia Pest Control Association may place bumper stickers on service vehicles and participate in a University of Georgia consumer survey to reach consumers. The Connecticut Pest Control Association plans to work with its state appraisers association to educate members. Both may look to state mandates.

That may be a hard case to make, said Dickenson. "Where does it end?" she asked. Some could argue a property survey is just as important and should be required by law.

For years, people thought Georgia state law required a termite clearance letter to sell a property, said Dickenson, and the pest control industry did "very well" with everybody thinking that.

"The industry is upset because under the old contract everybody got business," said GAR’s Hamilton. "Under the new contract, they may or may not get business."

That may be so, said professionals, but protecting consumers’ property is a tenet of the industry. "This game has four quarters," said Bell. "We’re in the first quarter." Inspection requirement changes are "going to happen, we just have to stay with it."

The author is a frequent contributor to PCT magazine and can be contacted at anagro@giemedia.com.