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Fanny Chu, Home Buyer in San Francisco County,...

pest inspection - who pays? in so cal, in nor cal?

Asked by Fanny Chu, San Francisco County, CA Thu Aug 9, 2012

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In my area (Sierra Foothills, No. Cal) either, depends on the type of sale-
1. regular sale- usually ask seller to pay and pay for section 1
2. short sale- buyer
3. Bank owned REO- some already have pest report completed, others require buyer to pay for it if wanted. Same with repairs, if repair is a condition of buyers loan/appraisal seller may (or may not) pay
4. Probate: buyer pays usually
5. VA buyer- seller has to pay

Of course each deal is different and who pays what is a negotiable point in purchase agreement.
1 vote Thank Flag Link Fri Aug 10, 2012
The pest inspection is the least of your worries. The real question is who will pay for the pest completion? A pest inspection fee is anywhere from $50 to $150 or so. The pest inspection cost is peanuts as compared to some of the estimates for work these days, which can run thousands. Not to mention, the dreaded "requires further inspection" items.

Elizabeth Weintraub
Broker-Associate #00697006
Lyon Real Estate
1 vote Thank Flag Link Fri Aug 10, 2012
There is no norm....it varies from escrow to escrow without regard to region. In the past, the sellers generally paid for the inspection, but as lenders make it more difficult to get a loan, the mention of a pest report in a contract can inspire demands from a lender not agreed to by the buyer or seller. So, many times the pest report is left to the buyer to supply.
1 vote Thank Flag Link Thu Aug 9, 2012
Thanks for all the replies. I thought CA would be CA, regardless of whether or not you are in so cal or nor cal. But I guess in this type of economy, everything is negotiable. In hot economies, it sounds like the seller gets away with more.
0 votes Thank Flag Link Fri Aug 10, 2012
Teri, great detailed response. I'll add, it is usually negotiable or can be reflected in the purchase price.
0 votes Thank Flag Link Fri Aug 10, 2012
In San Diego, seller generally pays for pest inspection and section 1 termite clearance. You might check with other Realtors in your community to see what is customary in San Francisco.

Take care.
0 votes Thank Flag Link Fri Aug 10, 2012
What Elizabeth said is the most important consideration. But to answer your question, and we are in No. Ca., it depends how it's written up in the purchase agreement. Buyers generally pay for their own inspections up here.
0 votes Thank Flag Link Fri Aug 10, 2012
I agree with Paula, Ed and the others. In this very tight and competitive market, a buyer does not want to complicate the offer by checking the "pest inspection" box in the CAR offer. The existence of a pest inspection report may complicate the approval of the loan. This also may discourage the seller from accepting your offer. Make it as simple as possible for the seller. Hopefully, then the seller will choose your offer. It is very difficult to get into contract right now in Elk Grove/Sacramento for desirable properties.
0 votes Thank Flag Link Thu Aug 9, 2012
While who pays for the report and inspections is negotiable, as everyone has indicated, if the buyer is using a VA loan, then the buyer cannot pay for the report, per conditions of the loan.
0 votes Thank Flag Link Thu Aug 9, 2012
Fanny...

You know I had a client ask me the same thing today earlier and like Paula says... it's really a negotiable item. In fact all the closing costs associated with a purchase can be negotiated.. Transfer taxes, escrow and title, pest reports and repairs.

In a normal market up here in the Sacramento area, the Seller would pay. When I sold property in the Bay Area, the buyer would pay for the report and ask the seller to make the repairs. I don't know what the "custom" in So Cal is.

However in this market the Sellers are now in control and have been for a while. As Paula says if you are working on Financing...? you don't want to include a pest inspection because they will ask for a copy. And.. If there are some "section I" items, they might want a clearance and make that a Funding condition of your loan.

So if a Pest Report is mentioned, what happens then..? What happens is a whole can of worms comes up. You the buyer will either have to come up with the costs to repair or back out of the deal if you don't have the funds to fix it and you can't get the Seller to make the repair.

Even when you don't include a pest in your offer, if the appraiser goes out and sees dry rot or other damage...? they will make a note of that on their appraisal report.

It then becomes a "condition", sometimes to be completed "prior to loan approval", which is exactly what is going on in one of the deals I have now pending.

That Buyer is actually bringing one side of a duplex up to an "average condition" just to get the appraisal approved..! He's had to pour about $2,000 into the property and doesn't even own it yet. The appraiser has to go out and re-inspect it to make sure it's in "average condition".

The Appraiser will then issue an updated report which then allows my Buyer to get his loan approved and the Lender will send final documents to Escrow for signature.

But....then we still have to get a "roof certification" and a "pest clearance" as a "prior to funding condition" to finally get the deal closed.

In this case the roof has to be replaced and there's about $1,000-$2,000 in dry rot repairs.

I've got the roofer to issue his certification before he's completed the work to help move the loan forward as a favor to me. However he requires my client pay the 10% deposit up front and he has to sign the contract.

After reading all this you are probably thinking...."What a hassle...!"

You ask "why would a buyer do all that...?"

It's because he got this property at the right time and the prices have been going up. When he closes it he'll have a place fixed up nicely with one tenant already in place and both units in great condition and a new roof.

He will have spent about $15,000 to do all that, but the value has increased by $25,000

HOWEVER... The bottom line is that he would really have preferred to close the deal AND THEN do the fix up. This is an unusual situation brought about by the properties poor condition and in our contract we didn't mention a Pest Report.

To solve all this as I'm doing now is the "art in real estate".

This is something pretty typical in our market now and I bet there are other broker and agents with stories more complex than this one they've navigated through recently.


I hope this helps...

Make it a Great Day.
0 votes Thank Flag Link Thu Aug 9, 2012
I'll agree with the other respondents- it's all negotiable.

However, national lenders involved in a short sale will not agree to pay for a home warranty or pest inspection so, no matter where the property is, it's normally not a good idea to have it in the contract for a buyer asking for a seller to pay for. It creates another step to counter it out when the seller's lender denies covering so...just not even mentioning it makes it a 'cleaner offer'.

National lenders involved in a foreclosure sale (REO) will often agree to a home warranty and pest inspection as part of a seller's cost. However, as Paula mentioned, if you specify anyone paying for a pest inspection at all on a contract will often have the buyer's lender asking for a copy of it, and inserting themselves in the middle of the negotiations. This would then often require repairs as a condition to loan on the property.

I can't imagine that it matters whether this is a property being sold in any part of California.
0 votes Thank Flag Link Thu Aug 9, 2012
In NorCal - Sacramento, County it is common for the buyers to pay for the pest and home inspections. However, from time to time the seller will provide it on MLS or willing to pay for it. Like everything else, everything is negotiable.

Nancy S Bergman
Realtor
Lyon Short Sale Specialist
DRE # 01893550
Lyon RE Downtown
2801 J Street
Sacramento, CA 95816
nbergman1@live.com
http://www.sachomesbynancy.com
0 votes Thank Flag Link Thu Aug 9, 2012
There is no norm....it varies from escrow to escrow without regard to region. In the past, the sellers generally paid for the inspection, but as lenders make it more difficult to get a loan, the mention of a pest report in a contract can inspire demands from a lender not agreed to by the buyer or seller. So, many times the pest report is left to the buyer to supply.
0 votes Thank Flag Link Thu Aug 9, 2012
It is always negotiated. Standard in southern Ca. Is seller unless its a short sale & sometimes REO.
0 votes Thank Flag Link Thu Aug 9, 2012
It is always negotiated. Standard in southern Ca. Is seller unless its a short sale & sometimes REO.
0 votes Thank Flag Link Thu Aug 9, 2012
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