will you buy a house with active termite activity?

still waiting for formal B&P but it was disclosed by agent that there is indeed termite activity there.
property in inner south brisbane and I was hoping to get much below under market value

 

Await the report and then take advice from the inspector. Would not rule it out totally but would ensure that there was adequate compensation made for the additional risks involved. If you could negotiate below market value and then further down after inspection it may well be worth it. Everything has a risk. At least you go in with your eyes open.

 

My answer is yes for the right price.

Everything has a price, lets say it was 500k the purchase price and land value was 300k. I would be happy to buy at 300k without any consideration as I get a free house with some nasty tenants (termites). Worst case I knock down the house and build.

If to repair the damage to the house was 50k then I would still be okay paying 400k as I have a further 50k to cover my risk. Obviously I would prefer to pay as close to 300k or below.

If the termites have just invested the house and will cost 10k to fix the situation then I would still be okay up for 450k.

All really depends on the market and what the house is like and the risk I am willing to take on.

TLDR - Yes

 

Yes - if the price is right.

 

Termites are everywhere in Brisbane.

At our PPOR, you can see their mud tracks on the trees in our garden. You just need to have the right protection and conduct regular inspections by a professional (we do annual ones on our PPOR).

I would consider a property with active termite activity. One just needs to know:

1. The cost to eradicate them.
2. The cost to repair the damage they have done.
3. The cost to install protection or upgrade it to a suitable standard.
4. A contingency for the unknown/risks one is taking.

Then you can subtract the above costs from FMV. If one can get the property for below this number, then it is worth going ahead.

Some sellers become very flexible when they learn they have termites in their property .

 

I bought one with active termites before. Managed to negotiate with the vendor to treat and fix the issue before settlement.

After the treatment, I sent my builder back to confirm. He gave me the green light and we proceeded with settlement.

So try that too, if the owner isn't willing to budge then hit them with a good discount. They will continually have issues on B&P with other buyers so in their best interest to work with you.

Cheers,
Michael

 

The issue IMO is trying to quantify the extent of any damage. The pest report will be littered with disclaimers, as they all are, so don't expect any compensation from them or their insurer if you find more damage than the report is immediately able to identify.

The only effective way to identify damage is to conduct an invasive inspection which to many involves drilling holes in walls and inserting cameras. The reality is that you'd need to do this every 600mm to get either side of studs in the wall. The only real way is to remove all wall linings for a visual inspection.

Like the others have said, I'd only buy if it was for a KDR or a development where you are paying land value only. Otherwise I'd walk (or run) away.

 

Yes, if purchase + repair was still a decent margin under MV so theres fat in the deal for me from day 1

 

If it's on land value...

 

I have on a number of occasions, repaired the damage, and moved on.

 

My 1st one that I bought recently had termite activity in garden. I got it treated and installed chemical barrier with termidol for prevention. Yearly inspections come up with 8 year warranty. I think after treatment, it should be all good for you. Just wondering if any seller could reduce the price just upto land value or as significant just because of termite activity. mine was not ready to cut even a $ on this.

 

Termites in a garden or wooden fences is an entirely different proposition to having active termite activity inside the house itself.

 

Inspectors will often find termites in the garden, in a nearby tree..... helps cover themself. We had one find them in a piece of timber under the house. Went around at see where he said it was and there was nothing there. Guess they were hungry! Never saw a termite there.