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Advice for Real Estate Agents – Selling your home – Tips

by / Wednesday, 06 February 2013 / Published in Pest Talk

Have you ever noticed how things get cleaned up and made neat and tidy before they are offered for sale. Whether it’s a motor car or some knickknack to be sold on eBay there is usually some effort put in to make the object look as presentable as possible. So when it comes to selling one’s home it comes as no surprise to see rubbish tidied up, lawns mowed, carpets and windows cleaned, repairs carried out and so on. There have even been TV shows that clearly demonstrate how a $10,000 makeover can increase the value of a home by $50,000 as well as make it easier to sell.

 

There are many reasons why some homes are difficult to sell, but probably the most common reason and the most difficult to fix is if the home is, or has been, infested with termites, or if the yard and landscaping is full of termites. Termites will make even the most keen home buyer reconsider proceeding with a contract to buy. Active termites, or the high potential risk of termites, are one of the main reasons why contracts fall over.

 

Real estate salespeople will tell you that they dread the pre-purchase termite report. Many sales and hence many commissions are lost when a home is given an unkind pre-purchase termite report. It may surprise you to learn that if the same home had been inspected by a different company it may have got a more positive report, or should we say, a less unfriendly report. Some years ago we did regular pest control work for the rental department of a real estate business in Coolangatta. Every now and again they would ask us to do a pre-purchase report for a property that was under contract. Our business relationship went along smoothly until one day we had to inspect a property that, simply put, was a termite disaster. Upon receiving the report the purchaser wisely declined to purchase the property. The owner of the real estate business was furious at us for writing an honest report. Needless to say we never received any more work from that real estate office. Up until then we had always thought that they were fair and reasonable people to do business with, but plainly we were wrong. The real estate agent went on to engage a new pre-purchase inspection company that guaranteed to write friendly reports regardless of how bad the property really was. So, if you are in the market to purchase a home, make sure you engage your own pre-purchase termite inspection company not one recommended by the seller or the seller’s agents.

 

When our customers intend to sell their home, we are often approached beforehand and asked to conduct a termite report for them so they can show it to potential purchasers. We always advise that this will generally be a waste of money because most buyers will wisely insist on getting their own report and not rely on one supplied by the seller. The only reason one might get a report done before putting the house on the market is so that any potential termite problem areas can be discovered and rectified prior to sale.

 

Termite damage inside the home falls into two categories. That which is easily repaired and that which is not. For example a skirting board that has termite damage can be replaced. However a bearer in a roof might cost thousands of dollars to be replaced. We are now going to give you a very important piece of advice if you are buying a new home. If you buy a home that has difficult to repair termite damage then one-day you will be selling the same home with the same difficult to repair termite damage. Now in fact, these homes may be perfectly good but they are always going to be difficult to sell and they are always going to sell at a considerably lower price than what they would be worth without the existing termite damage. If you are in love with a home that has hard to disguise termite damage and you want to go ahead and buy it anyway, make sure you get a very heavy discount on the price being asked because when it comes time for you to sell, you’ll be doing the same.

 

If you are buying a home that has termite damage that can be repaired you should also be seeking some discount. Before selling the home it’s a good idea to renovate any areas that have previous termite damage. If the renovation is done well, it will add value to the home and even a professional will find it difficult to discover this concealed termite damage.

 

In the past we have done inspections in homes where people have simply replaced one damaged skirting board in a room. The experienced inspector can usually spot that the skirting board is new, either because the shape of the skirting board does not quite match the other skirting boards in the house or simply because it has a fresh coat of paint and all the rest don’t.

 

How is your poker face? In the past when we were conducting a termite inspection we would make small chat with the seller and when they least expected it we would simply drop the question, “Has this house had any termite problems?” Then we would observe the body language and facial expressions to see if they matched the reply. We admit that this may be a little bit of a devious method but our job is to protect the interests of the buyer who is employing us to find out about the termite history, past and present, of the home they intend to buy. It will come as no surprise that most people lie to us if they have had termite problems. When the inspection is completed they are usually very anxious to know what we think of their home, did we find any termites? It’s at this point that we will discuss the room with the replaced skirting board. Once the seller realises that the game is up or thinks we know more than we do, they will usually disclose the full termite history of the home. We will want to know when it happened, where it happened, how bad was it, and how was it treated? And most importantly we will want to know what has been done to ensure that the termites will not return to do further damage in the future?

 

Our advice to sellers that have a home with difficult to conceal termite damage is that they don’t try to hide it from potential buyers. It is better to be open and say, “Yes, there was some termite activity in this house two years ago and we have done this and this and this to solve the problem. Plus we have done this and this to prevent termites from getting back into the home.” We would suggest pricing the house in such a way that you can come down in price to a price that you are comfortable with to make the deal. No doubt people will want a discount if they are going to buy a home with previous termite damage.

 

There is an alternative and that is to sell the house via auction. In most cases houses bought at auction are bought “as is” and the sale is unconditional. Serious bidders should have done their pre-purchase inspection before bidding on the house. Quite surprisingly, this rarely happens and the naive buyer ends up with a house + termites. It pays to remember that sometimes the unmentioned reason a house is going to auction is because of termite problems. What sometimes happens is that the real estate agent arranges a pre-purchase report and then shows it to everybody that intends to bid at the auction, that is, if they ask for it. Obviously if they have a report that gives the home a clean bill of health then they gladly show it to everyone. For these reasons you will find that most pre-purchase termite reports have a legal clause in them which makes them invalid to any third parties. All we can do is reiterate, ‘Buyer beware’.

 

Because pre-purchase termite reports are designed first and foremost to protect the insurance company that insures the report for professional indemnity, you will find many clauses in small print that virtually make the report pretty much worthless should you wish to make a claim later on if termites are discovered in the home. One of the big issues to be answered in a pre-purchase report is whether or not the home has any kind of ongoing termite control measures. In other words ‘risk management’. And in the vast majority of cases the answer to that question is a resounding “No!” and lo and behold, the vultures start to circle.

 

Some pre-purchase termite inspection companies will now write up a quotation for an expensive and intrusive perimeter treatment which all told will probably cost about $5000. The buyer may insist that the seller does it, or the buyer may seek $5000 discount off the price of the home so they can do it after they take possession. Of course in many cases, they just pocket the $5000 saving and don’t invest it in termite protection. In other cases the seller rings around for quotes and ends up getting a $1000 treatment and a certificate to say it is done so that the buyer is satisfied. In this case it’s usually a waste of a $1000 because the treatment is unlikely to be done correctly to Australian standards. That price is simply too cheap. So now the buyer thinks he has a safe home when in fact he doesn’t. Usually he doesn’t have a warranty either because the warranty (for what it’s worth) is for the person who paid for the treatment. The warranty is not for the property and is non-transferable.

 

In some cases the pre-purchase termite inspection company will recommend installing an expensive termite baiting system for round $2000-$3000 including 12 months worth of service. The buyer is somewhat protected for a year (depending on the quality and effectiveness of the system) but after that he inherits the ongoing costs associated with some of the high-priced termite baiting systems. In many cases they simply let it go and the house returns to being unprotected.

 

It seems to be a normal human condition that we are rarely afraid of what we can’t see unless we are properly educated to be cautious. For example we learn to wash our hands because we know that harmful germs can make us sick. On the other hand, teenagers take up smoking and ignore all the warnings fired at them because they think they can handle it and that they can give it up any time they want, and some of them do, but many don’t and they end up hooked on cigarettes for many years. The fact is that it is human nature to ignore warnings when they present us with an inconvenient truth.

 

Because termites travel underground they are an unseen threat to the timber in your home. Insurance companies don’t insure homes for termite damage because one in three homes in Australia will get termite damage during the life of the home. Insurance companies know the facts, and respect them. You would be amazed how many times we hear the words, “My home is safe. I don’t have termites.” This is said matter-of-factly from regular people who don’t give termites a second thought simply because they have never actually seen any, not that they are really looking. They simply believe termites won’t happen to them; the same way that teenagers smoking cigarettes believe that they aren’t at any risk.

 

At Green Termite Bait Systems we are preaching ‘prevention’ the same way your doctor preaches ‘healthy diet and exercise’ as a way to prevent illness and stay fit. They are both inconvenient truths. We know we should do it, but…

 

Our termite baiting system is designed to intercept termites that can be readily found in most suburban yards. When sufficient numbers of termites are gathered in the bait we then apply a registered termiticide which the termites transfer back to the nest where it is spread around. Soon the nest is dead and their home is destroyed rather than yours. It’s that simple.

 

For well under $1000 a DIY system can be set up around most homes. If you intend to sell your home and there are no existing or current termite control measures in place, then a DIY Green Termite Bait System is certainly going to help sell the home. If we were in the real estate business we would be making it plain to every homeowner selling a home that they could increase the value of the home and the likelihood of a smooth sale by adding a Green Termite Bait System and promoting it as a feature. It is simply a very sensible thing to do.

 

Smart people insure their homes for fire, flood and theft, all of which are less likely than termites. If you don’t already have a Green Termite Baiting System around your home then you should be adding one. It’s like diet and exercise. It’s going to give you active protection from expensive termite damage now and it’s going to greatly enhance the saleability of your home in the future. Without doubt, a home with quality termite protection measures in place has greater value than the same home without these measures. Furthermore, if you have a full service system and have paid for the (discounted) service in advance, you can gift the balance of the service to the new owners which becomes yet another feature to help close the sale.

 

Think about it. Would you sooner buy a home without termite protection or the same home with termite protection?

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