February 2010 / Vol.7 / Issue 2

Hello and Welcome to the February Greenpest News. Each month we aim to provide you with some useful information, keeping it short sweet and pertinent.

Contents

1. Pest Talk - Pre-purchase Termite Inspections - Out of Control.
3. Monthly Special.
4. Back Issues.

Pest Talk

20 years ago it was common for people to find a house that they liked and go ahead and buy it without too much fuss.  Probably the most difficult part was getting a loan from the bank manager.  Things have certainly changed.  Although it is not compulsory, it is highly recommended that before purchasing a home, you have it checked for termites and termite damage.  In most cases there will not be a problem and a home can be purchased with minimal fuss.  In a few cases the home will have serious termite damage or current termite activity and it may be prudent for the purchaser to walk away from the home and go and look for another one.

Within the pest control industry a new industry has arisen.  It is the pre-purchase termite inspection industry, and it has become the nemesis of just about everybody hoping to sell their home; not just the few people who are trying to get away from a home full of termites.  The problem for sellers is no longer the question “Is the home free of termites?”  The new problem arises when greedy pre-purchase termite inspection companies use blatant fear tactics to generate income by insisting on unnecessary termite treatments.

Here's how it goes:

• You find a buyer interested in purchasing your home
• The buyer desires a clear pre-purchase termite inspection in the contract
• The inspection reveals that the home is free of termites, however
• The home has not had a termite treatment done since it was built (which is commonplace) and
• The home is over five years old
• The pre-purchase inspection company state that the house is high risk of termites (which it probably is if it has no current termite protection) then insist that it must have a termite treatment done
• So t he buyer insists that the seller gets the termite treatment done
• The seller agrees and wastes $5000 paying the pre-purchase inspection company to do it OR
• The seller says no and the buyer goes looking for another home
• The buyer loses $250 for the pre-purchase inspection and wastes a lot of time looking for another perfectly good house that this same pre-purchase inspection company is going to find fault with anyway, no matter what.
• After maybe five or six houses are found unsuitable for purchase because they all require a termite treatment, the buyer realises that the problem does not lie with the homes, but with the pre-purchase termite inspection company who has now ripped them off for well over $1000 worth of inspections.

The hitch is that when someone has power over an important financial decision there is an opportunity for greed.

All companies that carry out pre-purchase termite inspections must carry professional indemnity insurance by law which covers them for fraud, and even for lying – believe it or not! 

Now mix in the factor that the insurance companies don't want to pay out claims for termites or termite damage that may have been missed by the inspector. So it's a great "out" for the insurance companies if the home's termite protection is not bought up to date. 

So if a home does not have current termite protection in place (which is most homes) it only makes sense to suggest to the buyer that when he buys the home he should invest in some quality termite protection.

However this is only happening with the more reputable termite inspection companies.  For those companies looking to make an easy buck, the onus is put on the seller and it is no longer a suggestion.  The buyer is told that before he purchases the home he should insist that the seller brings the termite protection up to scratch.  It's a do it or else situation.  It is a lose - lose situation.  If the seller does it then the seller loses money.  If the seller doesn't do it then the buyer loses the opportunity to purchase a perfectly good home and they also lose the money they spent on the pre-purchase inspection; the seller loses the sale, and the agent loses the commission.

Think about it.  Most homes for sale will have some faults: poor drainage, rickety fences, leaky gutters, cracked driveways, old carpet, outdated electrical wiring, no safety switches, and a dozen other things that may be in need of renovation, yet you do not see the contract subject to having all of these problems fixed before the house is sold.  These are matters that the new owners can take care of once they settle in.  The house has been priced accordingly.

Termite inspection companies have the power to make or break a contract.  This power is out of control, especially when perfectly sound houses are failed simply so the inspection company can make a quick buck by installing a chemical treated zone against termites.

Apart from simple opportunistic greed, there is another hidden reason why this recommendation (read insistence) is placed on every home that they inspect.  And that reason is to protect the inspectors themselves from liability.  If you buy the home anyway and ignore their recommendation for a chemical treatment zone and six months down the track you find that the home actually has termites, there is no way you can come back to the pre-purchase inspection company and blame them.  This is regardless of whether the termites have been there for less than six months or whether they were there prior to the inspection and were simply missed by the inspector.

You see, we are not saying that it is wrong to recommend that termite protection needs to be put in place when it is obvious that a home has no current termite protection.  But we do believe it is wrong to insist that the seller must pay for the termite protection or else the contract falls over.  It is simply a termite inspector's duty of care to advise the purchaser that the home has no current termite protection in place.  If the house is free of termites and there is no evidence of termite damage then the buyer should be advised as such and not scared away from the home simply because the termite protection is not current.

There is another aspect that is also worth considering.  If the buyer organises the ongoing termite management of the property then he is able to shop around and get the best he can find.  However if the seller organises it before the purchase is complete then the buyer gets the home with termite protection put in place by the seller.  Do you think the seller will have gone out and got the very best?  Or would you expect the seller to get the cheapest?

You can bet it will be the cheapest.  So now the buyer ends up with:

• A home that has poor termite management protection (probably)
• And a false sense of security thinking he is now termite safe.

Did the buyer read the fine print?  Generally the answer is “No.”   So they won’t know that the warranty for the termite protection is restricted to the previous owner!  That’s correct.  It is not valid to any third party – including the buyer.  The warranty isn't with the house; it is for the seller and the house combined.  So the buyer not only gets a house with the cheapest termite protection possible but it usually has no kind of warranty whatsoever!

Last week we had two of our customers ring us for advice because the contract for the sale of their houses fell over due to a failed pre-purchase termite report.  In both cases there was no evidence of termites in the house, nor any termite damage.  There were not even termites to be found in the yard.  It was also apparent that the termite inspector failed to even notice that both homes were fully protected by a Green Termite Bait System that had been maintained on a monthly basis. Both these homes were not only free of termites and free of termite damage but they both had up to date termite management in place!  It is truly sad to think that these homes should have got the highest marks from a pre-purchase termite inspector.  The buyer would be getting a wonderful home with very few termite worries and the seller would make the sale.  A clear win-win situation for everybody but unfortunately the greed and incompetence (not even noticing the baits) and outright selfishness of the pre-purchase termite inspector ruined the sale for everyone.

We don't know what the legal argument might be; we're not lawyers, but perhaps the pre-purchase termite inspector should now worry about being held liable for his actions?  And perhaps his insurance company should start to worry about being held liable for his professional indemnity?  It's about time that the pest control industry as well as the specialist insurance industry for pest controllers takes a long hard look at the way some of their members are conducting their business operations and perhaps begins to educate their members about doing the right thing by their customers (i.e. you the general public) rather than spending their time using their position of trust (as a termite authority) to mislead and rip of the public in their own self-interest.

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Note: To all our customers who have a Green Termite Bait System correctly installed and monitored: If you are selling your home, be sure to point out to both the Real Estate Agent and any potential buyers, that you have up to date termite preventative measures in place. Your Green Termite Bait System is a big sales feature of your home - especially if you are on a full service plan. Should any prospective buyer fail to understand the value and benefits of the system, simply give them our phone number and we will happily explain it to them on your behalf.

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Well, that's our newsletter for this month.  We hope you found it interesting.  If so, please forward it to your family, friends and work colleagues who may appreciate it also.  Thank you.

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The Greenpest News is Published by J & A Furnell Nominees P/L; Shop 23a Franklin Square, 60 Railway Street, Mudgeeraba, Gold Coast, Queensland, Australia. The opinions expressed in this newsletter are those of Jerry Furnell. The reader is encouraged to seek further information from appropriate government and statutory departments before taking any action based on this material alone.

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See you again next month.

Always... At your service,

Jerry Furnell
Green Pest Control & Green Termite Bait Systems.
Phone 1800 6 12345.

Copyright 2010 Green Termite Bait Systems & Green Pest Control. All rights reserved.

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