Termites in REO

[Bienes Raices]

I made an offer on an REO (bank never responded, so we were planning to resubmit) and then the agent discovered an inspection report that shows evidence of termites.

Has anyone here ever just lowered their offer amount and done the termite repairs? Does it effect the insurance rates afterwards since they know the house had termites at one time (the insurer will be able to find out about this, unfortunately). Should I just forget it? Thanks.

[J Scott]

I find termites in about 70% of the houses I rehab, and it's generally not a big deal at all. The two keys are:

1. Remediate any existing damage;

2. Get a reputable pest/termite company to treat and maintain a termite bond.

Unless there is significant framing damage, remediation is generally localized and not a big deal (in my experience). And treatment and bonding is generally less than $700 in my area for a decent sized house. So, total costs are likely $1000-2000...again, unless there is already significant damage to the structure.

I would recommend getting a termite inspection, getting an estimate on repairs and an estimate on treatment/bond, and then either eat the cost or ask for a reduction from the bank. Once the damage is repaired and the house is treated, there shouldn't be an insurance impact and buyers generally don't really care about past issues (again, in my experience).

I'm not sure how it is in your area, but here in Atlanta, if you pass on houses with termites, you wouldn't be buying many houses... :)