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A Termite Contract Might Be Your Home's New BFF

A termite contract just might be your home’s new BFF, especially if you live in a warm-weather state. If your warm-weather state also has a damp climate, it’s almost a given that a beautiful friendship will begin between your home and a termite contract as soon as you purchase one.

Read on to find out the details about:

  • What a termite contract is.

  • What a termite bond generally costs.

  • The difference between a termite contract or bond and a termite letter.

  • Why a termite contract is a good idea, especially if you’ve just purchased a home or are thinking about selling one.

What is a termite contract?

A termite contract (sometimes also called a termite bond) is a legal agreement between a pest control company and a homeowner. In essence, a termite bond is an insurance policy for your house that protects it against termite damage. It stipulates how often the pest control company will inspect your home for termites, clarifies the details of the treatments the pest control company will provide, and specifies the costs involved with the contract. The terms will also point out whether or not the termite bond is transferable to the new owner if you sell your home before the contract expires.

How much does a termite bond–or contract–cost?

According to Home Guide, the average cost of a termite bond to treat the home varies from $500-$2,000 for the annual contract, depending upon where you live and the details of the contract. Additionally, homeowners can expect to pay $75-$150 for the annual inspection.

Details that affect the cost of the contract include:

  • The size of the home. Bigger homes and grounds require more time to inspect and more bait units or other type of pesticide.

  • The type of termite. Some varieties of termites are more difficult and expensive to eradicate or deter than others are.

  • The frequency of the inspections. Most pest control companies offer a range of services from a one-time inspection to monthly inspections.

  • The company providing the service. Shop around, discuss types of services available, and read online reviews to get the best service at the best price.

What’s the difference between a termite bond or contract and a termite letter?

A termite bond is an agreement that includes an initial inspection and routine coverage for a specified length of time, but a termite letter is a document that’s issued after a one-time inspection, often as part of a real estate transaction. A termite letter is the general name for the document that verifies the results of the termite inspection. The official name of the document in my home state is the South Carolina Wood Infestation Report. Hardly anyone calls it that, though. It’s commonly known as a CL-100.

Regardless of its title, a termite letter is often a critical part of a purchase or sale of a home. A typical termite letter focuses on 3 basic things:

  • Termite activity–past or present

  • Termite damage–past or present

  • Actions taken to stop activity and/or repair damage

It’s not written in stone that lenders must require a home to pass a termite inspection before granting a mortgage on it, but they usually do. Lenders issuing a conventional mortgage–a mortgage backed by the lender itself–often insist upon a “passing grade” on a termite inspection before they are willing to issue the mortgage.

Termite inspections are required for VA (Veterans Affairs) and FHA (Federal Housing Administration) loans, both of which are government-backed. Surprisingly, USDA (United States Department of Agriculture) loans do not stipulate a termite inspection, even though those loans are also backed by the federal government.

However, simply because the lender or the loan program doesn’t require a termite inspection, that doesn’t mean you won’t need one to purchase a home.

Enter homeowner’s insurance. Most lenders require you to have homeowner’s insurance. And many homeowner’s insurance companies require a termite inspection before the policy is written. So, practically speaking, a termite inspection–and the resulting termite letter–really matter. In many cases, the purchase or sale of a home will stall if the home doesn’t get a clean termite letter.

Why does a termite contract make sense?

A termite contract makes sense on several levels, especially if you live in a termite-prone state. (Hint: Only Alaska is termite free.)

Wood-eating termites have ravenous appetites.

The startling truth is that the approximately two dozen termite varieties active in the United States cause an estimated $5 billion worth of damages to homes every year. The real kicker is that most homeowner's insurance policies don't cover termite damage.

So, once you recover from the unpleasant surprise of learning that termites have infested your home, you get to pay for the damage out of pocket; the average cost of damage repair is $3,ooo, according to Teminix. It's a classic one-two punch.

In Southern states with moist climates it’s not a question of whether an unprotected home will become fodder for termites, but when it will. A termite contract is the most effective--and comprehensive--way to protect yourself from hungry insects that love your home as much as you do.

Extensive termite damage can threaten the structural integrity of the home.

Termites are as small as ants, but they live in colonies that may contain as many as 200,000 termites. An average-sized colony generally contains 50,000-60,000 adults. When termites invade a home, they all work together to feed on whatever wood structure offers the best food source.

Since they thrive in damp warm places, termites often attack beams and framing pieces set in soil with poor drainage. It’s estimated that an average-sized colony could eat through the equivalent of 1 foot of a 2” by 4” piece of lumber in 5 months. At that rate, they could work through the entire length of an 8-foot framing piece in just under 3.5 years.

That may not seem awful, until you factor this into the equation: most termites in the U.S. are subterranean. They live underground or in dark damp places like basements and crawl spaces. If you don’t regularly check for termites, you might not know you have active termites in your home for years. By then they could have eaten through enough framing or support pieces to render your home unsafe.

A termite bond is a real perk to selling a home.

Other things being equal, a home with a termite bond on it is more attractive to buyers than one without it is. Often, the presence of a termite bond satisfies the requirement for a termite inspection and accompanying termite letter. So, it eliminates one hurdle, makes the process a step easier and eliminates some of the risk to the buyer. Win, win and win! (Add an extra "win" if the termite bond is transferable to the new owner.)

A termite bond helps a homeowner prevent difficulties in the future.

Given the destructiveness and prevalence of termites in much of the United States, a termite bond just makes sense, unless you are going to be very (and I mean VERY) diligent about treating your home for termites.

For new homeowners, termite control is a classic example of an ounce of prevention being worth a pound of cure. The cost of a termite bond is tiny compared to the cost of remediating the damage. And the eradication process, itself, can be expensive and tedious. According to Orkin, professional pest control companies have a variety of treatments, many of which are more potent than those available over the counter.

Rather than risking the time, expense and frustration of a termite infestation, homeowners are wise to introduce their home to its new BFF and purchase a termite bond.

Termite contracts, BFFs and HOMEwork

Termite contracts protect your home, enhance its attractiveness to potential buyers, and relieve you–as a homebuyer or seller–from one burden that sometimes complicates a real estate transaction. They require a comparatively small investment that can protect you from expensive damages you’ll probably have to pay for out of pocket, since most homeowner’s insurance policies don’t cover termite damages. So, you give your home a BFF of its own, and you protect yourself when you purchase a termite contract.

Do you have questions about other issues that can derail a purchase or sale of a home? Are you confused about the jargon associated with real estate transactions? Would you like a free, up-to-date estimate of the value of your home? Do you need expert guidance about purchasing your first home or selling your current home so you can upsize, downsize, or relocate? Contact us. We would love to do the HOMEwork for you.


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