Can You Sell a House with Termite Damage?

Two Ways to Sell Your Home with Termite Damage

The question is not “can you sell a house with termites?” — you can. In fact, you can sell your house even if it’s condemned. The question is how? There are two ways of selling a home with termite history. The first, and easiest way is to sell it in its current condition. Let the buyer deal with the issue.

The second way to sell your home is to repair any damage and remediate the problem for the future. Then you can put your home on the market and attempt to sell it to the general public.

Let’s look at everything that goes into both methods of selling a home that has termites.

Difficulties Coming with Selling a House with Termite History

Selling a house with evidence of termites as-is on the open market is possible, but it can be challenging. The existence or history of termite infestation will make your home less attractive to most buyers.

If there is evidence of a prior termite presence, buyers will expect to see that steps were taken to prevent future problems. If those steps weren’t taken, the overall maintenance of your home will come into question.

Most homebuyers finance at least some part of their purchase, if not entirely. A lender will not close on a purchase if their collateral needs repairs. If the seller can’t do it, then the buyer would have to pay for repairs to someone else’s property before closing.

Most traditional buyers who intend to live in your home will take a pass on your house and look at other properties.

If you are selling a house with termites as-is, and if traditional buyers have a hard time making that purchase, then who are your buyers?

Who Would Buy a House with Termite Damage or History?

An as-is buyer will need to have enough cash to buy the house, make repairs, and take preventative measures to keep termites away in the future.

They would need to be knowledgeable in the areas of construction and market values.

A certain number of homes are bought each year with cash. More retirees are using the equity that they have built up over the years to avoid having a mortgage. However, sources such as Goldman Sachs estimate that they are only a small portion of today’s cash buyers.

Buyers paying all cash who intend to live in their purchase are likely to want a “turn-key” property that needs little to no work.

According to RealtyTrac, a majority of cash buyers are investors. Real estate investors are professional property owners who use their purchase as a source of income. They generally fall into one of two groups:

• House flippers are investors who buy a home that needs repairs or updating. They make those improvements and then sell the home right away.
• Landlords will keep the property after repairs and rent it to tenants. They receive ongoing cash flow from the rental income and can sell the property later.

Both types of investors are looking for homeowners who need to sell a house that needs work. They regularly deal with issues like termites and would seriously consider buying your home.

Professional real estate investors will serve as their own construction manager overseeing repairs. They are often able to do the work themselves. Repairs that are outside of their area of expertise are done by crews with whom they work on a regular basis.

Investors are able to put the house in good order for much less money than an average homeowner. This helps to ensure that they can reach their desired profit margins.

Not only are investors not turned off by termites, but they are also actually looking for homes like yours.

Now, let’s look at the advantages and disadvantages of selling your house to an investor.

Pros & Cons of Selling Your Home As Is to an Investor

The advantages of selling your home with termite damage to an investor include:

• You are able to sell the home as-is. You don’t have to pay for repairs and remediation and then hope that the termite history isn’t a problem for potential buyers.
• They pay cash for your home. You don’t have to worry about a last-minute decline by a lender because of the borrower’s credit or the condition of your house.
• Because investors know market values and repair costs from experience, they often don’t need appraisals or third-party inspections. They can close fast, sometimes as quickly as a few weeks after their offer has been accepted.
• You can avoid all of the emotional and time-consuming events that disrupt your family like showings and open houses. With investors, you deal directly with the principal involved, not the public.
• Real estate investors handle everything themselves. There are no realtor fees or commissions. This eliminates the largest part of your closing costs. The remainder may be included in their offer so that you don’t have to come to the closing table with any funds.

If you want to learn more about the last point, you can read our articles Cost of Selling Your Home with a Realtor and Closing Costs for Home Sellers (Realtor vs. Investor vs. FSBO Compared).

Depending on the market in your area and the condition of your house, you may receive less than full market value for your home. The investor has to account for the cost of repairs and their profit margin.

However, considering the upfront expenses for repairs and realtor commissions that are eliminated, the certainty of selling to an investor may be well worth the purchase price, depending on your situation.

If you want to learn more about how best to sell your house to a real estate investor, read our article Selling Your House to an Investor the Right Way.

How to Maximize the Price when Selling for Cash As Is

Even when you are going to sell your house fast and for cash to a local investing company, you should always approach several qualified buyers and try to get multiple offers for your property.

Carefully check out each prospect for experience and reliability. Make sure that they have the financial strength to close on the terms that they offered.

Different investors may have different appetites for particular areas and home types. Ideally, you should cast a wide net to reach the largest number of these qualified buyers.

It would be great if you could have an industry insider to help you with your search. That’s exactly what HouseCashin does. Using a stringent qualifying process, HouseCashin has researched real estate investors to find the most reputable buyers for your home.

Our “Request a Fair Cash Offer” form will bring you a few real offers from real estate investors looking for properties in your location and competing with each other. Then you can compare the offers and pick the best deal.

Depending on the level of infestation and damage to your home, you may decide to handle the repairs yourself and sell your home to the general public rather than an investor.

Once the home is in good shape, you can either market it for yourself by listing it as For Sale By Owner (FSBO) or use one of real estate agents in your area to list and market it for you.

A realtor will help you to oversee the termite treatment, repairing the damage and doing other necessary work to put your house in the market condition.

If you sell the house yourself, you will have to depend on basic social media platforms like Facebook, word of mouth, and a sign in your yard. You won’t have access to the Multiple Listing Service (MLS) that advertises your home to thousands of brokers hired by buyers to look for homes for them.

Although you will save on listing commissions, you should be prepared to pay at least a buyer’s broker’s commission or you might lose those potential buyers (about 80% of all buyers, according to the National Association of Realtors).

A listing broker will also make sure that you understand the myriad of documents that are required by most states in today’s consumer protection environment.

After deciding on whether to work with an agent or sell the house yourself, you need to resolve the termite problem.

Stopping the Infestation

If you suspect that termites have infested your home, you should take steps right away to deal with the problem.

Some signs of termites include;

• drywall that has discoloration or pinholes
• mud tubes on the outside of your home
• warping or squeaking floors
• stuck windows
• piles of wings left by swarms
• peeling paint that looks like it was caused by water damage.

There are different types of termites. Most of them are drawn to moisture. Excessive dampness in or under your home is a major cause of concern.

First, you will need to have your home treated to kill existing termites. Then you will have to remove or block the moisture that drew them to your home in the first place.

This could involve placing a moisture barrier of plastic sheeting in your crawlspace, or a more extensive encapsulation or waterproofing of the space.

After the treatment, termite “bait traps” can be installed in the ground around your home to detect termites before they reach your house. These will require regular inspection by a pest control company. The bait in the trap draws termites.

When an inspector finds termites in the trap, they will take immediate steps to re-treat the area around your home. This will kill the termites before they can reach your property.

Getting a Termite Inspection

At the first sign of termites, you should immediately arrange for a termite inspection.

Pest control companies are licensed to make inspections and to treat for termites. A pest control company would need to perform the actual termite treatments.

Many home inspectors are licensed to inspect for termites but they aren’t licensed to treat them. Using a licensed home inspector might make sense if you’ve spotted any structural damage that needs repairing. They can give you advice in that area.

The house should have a follow-up inspection after the treatment and remediation work has been done.

Licensed inspectors will charge between $150 and $250.

Prior to putting your home on the market, all inspections and work will be paid for by you. Since maintaining a pest-free environment in your home is considered routine maintenance, your homeowner’s insurance policy will not cover any of these costs.

The buyer is the one who pays for a termite inspection when selling a house, and they will have their own inspection done once the property is under contract. They, and their lender, will want to see that an independent third party reviewed the property and any pest control work that was done.

Repairing the Damage

We’ve talked about the role that moisture plays in attracting termites that can damage your home. However, the moisture itself can cause damage as well.

Moisture can cause wood rot and dangerous, illness-causing mold. If the damage to your house involves these problems, you may want to read our articles How Can I Sell My Home with Mold? and How Can You Sell a House with Water Damage?.

The source of moisture problems is usually in the crawl space, basement, or foundation of your home. Any wood damage in that area can be serious to the structural integrity of your property.

Wood that has been infested by termites will have to be removed. Other damaged wood will either have to be removed or strong wood added to provide the needed support. Repair costs can quickly exceed the cost of stopping the termites.

Depending on how extensive a mold problem is, the affected wood will either have to be removed or thoroughly scrubbed. Moldy wood has to be removed carefully following strict guidelines for removal and disposal.

Cleaning affected areas may not sound like a very expensive fix. But, when you consider that labor cost makes up from 50% to 70% of this kind of work, you can see how the expense can quickly grow.

Moisture can also ruin the insulation in your walls and under your floors. This destroys the material’s ability to properly insulate your home and it will have to be replaced.

If moisture is the result of poor drainage in your yard, you may have to dig up the area next to your foundation and install drainage “tiles” or french drains. This will probably involve waterproofing of the masonry outside and, if possible, inside the foundation.

Do I Need a Termite Bond to Sell my House?

A termite bond is a good idea when selling your house, especially if there is evidence of prior infestation.

A termite bond is a warranty by a pest control company against future termite problems. The bond will call for re-treatment within a predetermined period of time if termites are found. It typically calls for re-inspection on a regular schedule.

A termite bond ensures prospective buyers that future problems will be dealt with by a reputable pest control expert and raises your chance to find a buyer sooner.

The prices for termite bonds depend on the types of pests included in it, the location and size of your property and other factors. The prices start from $200 and go as high as a few thousand dollars.

So How Much Does It Cost to Fix a House with Termites?

The cost of dealing with termites will depend on a number of factors. Costs can be very different depending on the circumstances. The factors include:

• The size of your home.
• Whether you have a slab foundation, crawl space, or basement.
• The extent of the infestation.
• The extent of any damage.
• Is mold present?
• Was insulation damaged?
• The source of the moisture.
• What will it take to keep the moisture out?

If your home needs minimal work, the cost will be about $2 to $4 per square foot. The difference would be for the size and shape of the space being treated. Minimal work would be:

• termite treatment
• some cleaning
• a lightweight vapor barrier
• some sealing.

A medium-range of work will cost from $3 to $7 per square foot. This might include;

• mild mold removal
• heavier barrier materials
• minor repairs
• replacing insulation
• perhaps the installation of a pump or dehumidifier.

If your home needs a lot of work, your costs can get up to $5 to $10 per square foot. This could include:

• a lot of mold removal
• the thickest barrier materials
• waterproofing/sealing
• structural repairs
• a sump pump
• foundation excavation/drainage work
• replacing insulation.

When you add it up, homeowners who have to make termite related repairs are looking at anywhere from $3,000 to $8,000 with an average of about $5,000. However, more complicated jobs can cost as much as $15,000.

Do You Have to Disclose Termites when Selling a House?

Some states specifically require that you disclose whether or not your home has termites or damage caused by termites. Others ask you to confirm or deny whether the property has a problem with “pests”.

Still, others make you disclose if there is physical damage (of any kind) to the house. And, most states have a general statement on their disclosure form that asks if your house has any material defects.

Most homebuyers, and certainly their attorneys, would consider termite infestation, current or past, to be a material issue with the property.

Even in the few remaining states that leave it to the buyer to protect themselves, known as caveat emptor states, lenders will make sure that they know if termites are a problem. FHA and VA loans require a pest inspection.

Therefore, it’s always best to fully disclose a problem in writing, in a disclosure form used in your state.

To choose the option that works best for your situation, you need to balance the amount of work that needs to be done, the amount of money that you have, and how quickly you need to sell.

If you have a minor problem that can be easily fixed, then it shouldn’t take too much time or money. You should look at fixing the problem and selling it the traditional way for the highest price.

If you have a bigger problem, you can expect that you will need more money and more time to put your home in condition to sell. If you don’t have both the time and money, you may want to sell your house to an investor.

If you just don’t have the funds to correct the problem, then time is also a problem. If you don’t address termite and moisture damage right away, the problem will get worse. You’ll need even more money to fix the damage.

If you don’t have the time or money to prepare your home to sell, then selling to a real estate investor is a good option for you.

To maximize the value you get from the sale of your property to an investor, consider requesting a cash offer from HouseCashin. We are a national platform connecting homeowners looking to sell their house fast and for cash with real estate investors willing to help them.

Fill out our “Request a Cash Offer” form to get a few offers from competing real estate investors working in your area and vetted by our reputation standards. Then choose the best offer and quickly close on your home within a couple of weeks, skipping the inconveniences and upfront expenses of a traditional real estate sale.