Termite Inspection When Selling a House in California: Section 1, Section 2, and Who Pays
A termite inspection in California is one of the most common reports in a home sale, and it often surprises sellers with a long list of repairs. If you’re getting ready to sell, it helps to know what the inspector looks for, what “Section 1” and “Section 2” mean, and how the costs are usually handled.
We’ve been buying houses in California since 2003, and many of the older Bay Area homes we buy have termite or dry rot damage. We’re not pest control operators, so rely on a licensed inspector for findings and costs. Here’s how the process generally works.
What a California Termite Inspection Covers
The official name is a Wood Destroying Pests and Organisms Inspection Report. It’s done by a company licensed by the California Structural Pest Control Board. Despite the name “termite report”, the inspector looks for more than termites:
- Subterranean termites, which live in the soil and often show up as mud tubes along the foundation
- Drywood termites, which live inside the wood and leave small pellets
- Fungus or dry rot, often around leaky plumbing, decks, window frames, and siding
- Wood-boring beetles
- Conditions that invite problems, like wood touching soil, plumbing leaks, or poor drainage
The inspector typically checks accessible areas: the exterior, the crawlspace, the attic, garages, decks, and inside the home. Areas they can’t access may be listed as needing further inspection.
Termite Inspection California: Section 1 vs. Section 2
California termite reports usually sort findings into two categories. This is the part that matters most for negotiations.
Section 1
Section 1 items are active infestation or infection, or damage caused by it. Examples include live termites, active dry rot, or damaged framing. Lenders and buyers often focus on these, and they’re usually the items a buyer asks the seller to repair or credit.
Section 2
Section 2 items are conditions likely to lead to infestation or infection if left alone, but no active problem was found yet. Examples include a slow plumbing leak, wood in contact with soil, or excessive moisture under the house. These are often negotiated, and buyers sometimes accept them as-is.
Reports can also list “further inspection” items, where the inspector couldn’t see enough to say for sure, such as behind a wall or under a covered deck.
Is a Termite Inspection Required When Selling?
California law generally doesn’t require a termite inspection just to sell a house. In practice, though, one is common because:
- Many buyers ask for one as part of their purchase contract
- Some loan programs may require Section 1 work to be completed before funding
- The standard purchase agreement lets buyer and seller decide who pays for the inspection and repairs
If an inspection is done, the company files the report with the Structural Pest Control Board. That means past reports on a property may be available, so a problem found once doesn’t just disappear.
Who Pays for Termite Repairs?
There’s no single rule. Who pays is negotiated between buyer and seller, often in the purchase agreement. Common arrangements:
- Seller pays for Section 1 repairs, and the buyer takes Section 2 as-is
- Seller gives a credit at closing instead of doing the work
- Buyer accepts the house as-is, often reflected in the price
When the work is finished, the company can issue a completion notice, often called a termite clearance, showing the Section 1 items were addressed. Treatment can range from local spot treatments to tenting (fumigation) for widespread drywood termites, plus wood repairs. Costs vary a lot by house, so get a written bid and consider a second opinion on big items.
Your Options as a Seller
- Fix Section 1 items before listing. This can make the house easier to sell to financed buyers and avoid surprises in escrow.
- Get the report early and price it in. A pre-listing termite report lets you disclose issues up front and decide on repairs or credits on your terms.
- Sell as-is to a cash buyer. A cash buyer who buys as-is takes on the repairs.
When we make an offer, it’s based on comparable sales, our estimate of the work the house needs, and our holding and resale costs, and we’ll walk you through the numbers if you ask. Because there’s no lender involved in our purchases, a lender-required termite clearance isn’t part of the process. You don’t pay commissions, we cover typical closing costs, and we don’t renegotiate over small or expected findings. If you’re dealing with bigger problems, our guides on selling a house with mold and selling a house with foundation problems may help.
Don’t Forget Disclosures
Selling as-is generally means you aren’t making repairs, not that you can skip disclosing what you know. In California, known termite damage, past treatments, and prior reports are generally things to disclose. Keep copies of reports, bids, and receipts. A real estate attorney or your agent can help with the wording.
When a Cash Sale Isn’t the Best Option
If the termite report shows only modest Section 1 work, the house is otherwise in good shape, and you have time, doing the repairs and listing with an agent will often get you a higher price. A cash sale tends to make more sense when the damage is extensive, there are other big problems on top of it, the house is vacant or inherited, or you’d rather not manage contractors. Our cash offer vs. listing page shows how net proceeds typically compare.
Frequently Asked Questions
Generally no, not by law. But many buyers request one in their contract, and some loan programs may require Section 1 repairs before funding, so most traditional sales include one.
Section 1 covers active infestation, infection, or damage. Section 2 covers conditions likely to lead to problems, like moisture or wood touching soil, where no active issue was found yet.
It’s negotiable. Often the seller pays for Section 1 work or gives a credit, and the buyer accepts Section 2 items, but every deal is different.
It’s the completion notice a licensed company issues after the recommended Section 1 work is done. Lenders and buyers often ask for it before closing.
Yes. You can price it to reflect the damage or sell to a cash buyer who takes on the repairs. You should still disclose what you know.
Get an Honest Offer
If a termite report came back with more work than you want to take on, we’re happy to take a look and give you a no-obligation cash offer you can compare with fixing and listing. No pressure. Call Lawrence at (510) 824-8710 or fill out the form below.