Who Pays for the Termite Inspection: Buyer or Seller?

A termite inspection, also known as a wood-destroying insect (WDI) inspection, identifies the presence or past evidence of pests like termites, carpenter ants, and certain beetles that can damage a property’s wooden structures. This assessment helps uncover potential infestations or damage. It provides insight into necessary repairs or treatments before a sale is finalized, protecting both the buyer and seller.

Common Payment Practices

In many real estate transactions, the buyer typically covers the cost of a termite inspection as part of their due diligence. This allows the buyer to gain an independent assessment of the property’s condition. A standard termite inspection can range from $75 to $200 or more, and this expense is usually paid directly by the buyer to the inspection company.

Alternatively, a seller might choose to pay for the termite inspection to facilitate the sale or address buyer concerns. In a competitive market, a seller-paid inspection can make a property more appealing. This can also occur if initial findings suggest a problem, prompting the seller to cover the cost to expedite the sale. The seller may cover this expense at closing.

Payment responsibility for the termite inspection is often a point of negotiation between the buyer and seller. They might agree to split the cost, or one party might cover the inspection fee while the other assumes responsibility for any necessary treatment or repair costs. This flexibility allows for an agreement that suits both parties’ financial considerations. The exact terms are typically outlined within the purchase agreement, providing clarity on financial obligations.

Factors Affecting Payment Responsibility

Current real estate market conditions significantly influence who assumes the cost of a termite inspection. In a seller’s market, characterized by high demand and limited inventory, buyers may cover inspection costs to make their offer more competitive. Conversely, in a buyer’s market, where there are more homes available than interested purchasers, sellers might be more willing to pay for inspections or offer concessions to attract buyers and close a deal.

Regional and local customs also play a role in determining payment responsibility. In some areas, it is a tradition for either the buyer or the seller to pay for specific inspections. Real estate professionals familiar with the local market can provide guidance on these common practices, which can streamline the negotiation process. These established norms help set expectations for who typically bears certain transaction costs.

The overall negotiation strategy between the buyer and seller is a primary determinant of payment responsibility. A buyer might request the seller cover the inspection cost, especially if they are absorbing other expenses or if the property’s condition warrants further investigation. Similarly, a seller might agree to pay for the inspection in exchange for a higher sale price or fewer contingencies in the contract.

Requirements for Specific Loan Types

Certain mortgage loan types have specific requirements regarding termite inspections, influencing who can pay for them. For Federal Housing Administration (FHA) loans, a Wood Destroying Insect (WDI) report is generally required in areas where infestations are common or if the FHA appraiser observes signs of damage or active infestation. While FHA guidelines do not explicitly mandate who pays for the WDI report, the buyer typically assumes this cost unless the sales contract specifies otherwise. If an active infestation or damage is found, the seller is usually responsible for the treatment and any necessary repairs to ensure the property meets FHA’s minimum standards.

The Department of Veterans Affairs (VA) loan program also frequently requires a WDI report, particularly in regions with a moderate to heavy probability of infestation. Historically, VA regulations often prohibited the veteran buyer from paying for this inspection. However, a change in VA policy in June 2022 now allows the veteran buyer to pay for the termite inspection, providing more flexibility in negotiations. Despite this change, the VA encourages buyers to negotiate the cost with the seller, and in many cases, the seller still covers this expense. If the inspection reveals issues, the seller is typically expected to address the infestation and repair any damage before the loan can be approved.

In contrast to FHA and VA loans, conventional mortgages generally do not mandate a termite or WDI inspection for loan approval. While lenders may recommend one, the decision to obtain such an inspection usually rests with the buyer as part of their home inspection process. The absence of a specific lender requirement means there is greater flexibility for the buyer and seller to negotiate who pays for a termite inspection.