When Is a Termite Report Clear?

Whenever I speak with people about real estate they always ask me how it is dealing with today’s real estate market. I tell them that we are selling houses but that everything is harder and more work than in past years. The newest wrinkle is the termite report.

Most lenders require that a termite report be done and that a clear report be issued before they will approve/fund a loan. It used to be that the report needed to show “no visible evidence of infestation from wood destroying insects was observed”. If evidence was observed, then proof of a recent treatment needed to be provided or a treatment needed to be done and then a clear report provided. Now lenders particularly for FHA loans are requiring that if any “conditions conducive to infestation” are listed on the termite report they must be corrected and a clear report issued before the loan can be approved/funded. The conditions may include excessive moisture, wood to earth contact, and dry rot. It is best to ask for these repairs as part of the Buyer’s Inspection Notice and Seller’s Response. However, sometimes the lender is not notifying the parties until right before closing that these items need to be fixed which results in a scramble to get them corrected and often times a delay of closing.