The Homeowner’s Guide to Reading a Termite Report

If you've ever opened a termite report and felt like you were reading a document written in a foreign language, you're in good company. These reports are packed with codes, abbreviations, diagrams covered in numbered arrows, and phrases like "cellulose debris" and "faulty grade" that mean almost nothing to a normal person. And yet this single document can shape thousands of dollars in negotiations, delay a closing, or even kill a deal entirely.

Here's the thing most people don't realize until they're deep into a transaction: the termite report is one of the most negotiated documents in a home sale. Buyers use it to ask for repairs or credits. Sellers use it to prove the house is sound. Lenders sometimes require a clean one before they'll fund the loan. So learning how to read a termite report isn't just a nice skill to have. It can directly protect your money.

In this guide, we'll walk through exactly what a pest control report contains, what the confusing terminology actually means, which findings matter, which ones are mostly noise, and how to use the report to negotiate intelligently whether you're buying or selling.

What a Termite Report Actually Is (and What It Isn't)

First, let's clear up the name. What most people call a "termite report" is officially a Wood Destroying Organism (WDO) report or, in many states, a Wood Destroying Insect (WDI) report. The name matters because the inspection covers far more than termites. A licensed inspector is looking for evidence of anything that eats, tunnels through, or breaks down the wood in your home. That includes subterranean termites, drywood termites, dampwood termites, carpenter ants, carpenter bees, powderpost beetles, and wood-decaying fungus, which most of us know as dry rot.

The inspection is visual. That's an important limitation to understand right up front. The inspector examines accessible areas of the structure, probes suspicious wood, and looks for the telltale signs of infestation like mud tubes, frass (termite droppings), damaged wood, and shed wings. What they cannot do is see through walls, under wall-to-wall carpet, behind stored belongings in the garage, or inside areas with no access hatch. Every report will list "inaccessible areas," and we'll talk later about why that section deserves more attention than most people give it.

A termite report is also not a general home inspection. Your home inspector looks at the roof, the furnace, the electrical panel, and a hundred other systems. The termite inspector has one job, which is wood-destroying organisms and the conditions that invite them. The two reports overlap in places, especially around moisture issues, but they are different documents produced by different licensed professionals.

The Two Main Report Formats You'll Encounter

Depending on where you live, your termite report will follow one of two general formats, and knowing which one you're holding changes how you read it.

The California-style structural pest control report

California, along with a handful of states that follow a similar model, uses a standardized structural pest control report that divides every finding into categories. This is where the famous "Section 1" and "Section 2" language comes from, and honestly, it's the single most useful concept in the entire report, so let's define it carefully.

Section 1 items are active infestations, active infections, or existing damage. Live termites in the subfloor, active fungus growth on a bathroom joist, wood that's already been eaten. If it's happening right now or has already caused damage, it's Section 1. These are the findings that lenders, buyers, and agents focus on, because they represent a current problem with a real repair cost attached.

Section 2 items are conditions likely to lead to infestation or infection in the future. Nothing is actively wrong yet, but the setup is bad. Think of earth-to-wood contact where soil piles against the siding, a shower that shows early signs of a slow leak, missing screens on foundation vents, or wood debris left under the house. Section 2 items are essentially the inspector saying "this will become a Section 1 item eventually if you don't address it."

Some reports also include a "further inspection recommended" category, sometimes called Section 3 informally. This flags areas the inspector couldn't fully evaluate, like an inaccessible attic space or evidence that suggests hidden damage behind a wall. These items are sneaky because they carry unknown costs. A further-inspection item can turn into a five-figure repair once someone opens up the wall, so never treat these as an afterthought.

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The NPMA-33 form used in most other states

Outside the California model, most of the country uses the NPMA-33, a standardized onepage form (with attachments) developed by the National Pest Management Association. If you're getting a VA or FHA loan in a termite-prone region, this is almost certainly the form your lender will require.

The NPMA-33 doesn't use Section 1 and Section 2 language. Instead, it asks the inspector to check boxes across a few key areas. Section II of the form reports whether there is visible evidence of wood-destroying insects, whether there's live activity, visible damage, or evidence of a previous treatment. Section III covers whether the structure appears to have conditions conducive to infestation, which is roughly the same concept as California's Section 2. The form also documents obstructed or inaccessible areas.

The most important line on an NPMA-33 is the finding in Section II. A report showing "no visible evidence of wood destroying insects" is what people casually call a "clear" report. A report noting visible evidence, live insects, or damage will typically trigger a conversation about treatment and repairs before the loan moves forward.

How to Walk Through the Report, Page by Page

Now let's actually read one. Grab your report and follow along.

Start with the cover page and the basics

Check the property address, the inspection date, and the name and license number of the inspecting company. This sounds obvious, but reports do occasionally get issued with wrong unit numbers or stale dates, and lenders are picky about report age. Most lenders want a termite report dated within 30 to 90 days of closing, depending on the loan type and region.

Also note whether this is an original report, a supplemental report, or a reinspection. A supplemental report modifies an earlier one, which means you need both documents to see the full picture. If someone hands you only the supplemental report showing everything is fine, ask for the original it's amending.

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Study the diagram before you read a single finding

Nearly every full termite report includes a rough diagram of the structure with numbered or lettered codes marking where each finding is located. Spend a minute with this drawing before diving into the text. It instantly tells you whether the problems cluster in one wet bathroom, spread across the entire substructure, or sit out in the detached garage where they matter less.

The pattern of findings tells a story. Five findings all around one shower usually means a single moisture source that, once fixed, resolves everything. Five findings scattered across all four sides of the foundation suggests a more systemic issue like poor drainage or widespread subterranean termite activity, and that's a different conversation entirely.

Read each finding as a three-part statement Every individual finding in a well-written report has the same anatomy. There's the finding itself (what the inspector observed), the location (keyed to the diagram), and the recommendation (what the inspector says should be done about it). Train yourself to read all three parts together, because the recommendation is where the money lives.

For example, a finding might read: "Fungus damage was noted at the subfloor and floor joists in the hall bathroom area." The recommendation might then say: "Remove and replace damaged subfloor and joist sections. Owner to repair floor coverings." That second sentence tells you the pest company's bid covers the structural wood but not the tile floor you'll need to reinstall afterward, which could easily double the real cost of that line item.

Decoding the Most Common Findings

Termite reports use a fairly small vocabulary, and once you know these terms, most reports become surprisingly readable.

Subterranean termites live in the soil and build mud shelter tubes up foundations to reach wood. Evidence includes those pencil-width mud tubes, damaged wood with soil packed inside the galleries, and swarms in spring. Treatment usually involves a chemical soil treatment around and under the foundation, and it's generally quite effective. Subterranean termite treatment is common and shouldn't panic anyone, though the damage they've already done needs its own repair line.

Drywood termites live entirely inside the wood, no soil contact needed. The classic evidence is frass, tiny six-sided fecal pellets that look like sawdust or coarse pepper piling up below infested wood. Localized drywood infestations can sometimes be spot-treated, but widespread activity often leads to a fumigation recommendation, meaning the whole house gets tented. Fumigation is disruptive and typically costs several thousand dollars, but it's routine in coastal and southern markets.

Fungus or dry rot is wood decay caused by moisture, and in many reports it accounts for more findings than termites do. Wherever water repeatedly touches wood, decay follows. Common locations include shower walls, around toilets, under sinks, at exterior door thresholds, and on decks and eaves. The critical thing to understand is that repairing the rotted wood without fixing the moisture source just resets the clock. Always ask what caused the moisture.

Cellulose debris means wood scraps, form boards, or paper left in the crawl space, usually from the original construction. It's a Section 2 style item because that debris is basically a welcome mat for subterranean termites. The fix is cheap: someone crawls under the house and removes it.

Earth-to-wood contact and faulty grade both describe soil sitting too high against the structure, letting termites and moisture reach wood directly without any visible warning signs. These sound trivial and often cost little to correct, but left alone they're among the most reliable predictors of future infestation.

Excessive moisture or plumbing leaks noted in the substructure deserve real attention, because moisture is the root cause behind most fungus findings and it attracts termites too. If the termite report notes standing water or a leak, loop in a plumber or your general home inspector's findings.

Reading the Bid: Where the Real Negotiation Happens

Most full termite reports come with a cost breakdown, either item by item or as lump sums for Section 1 and Section 2 work. Here's how to read it like a pro.

First, separate the Section 1 total from the Section 2 total. In most negotiations, Section 1 items are the ones buyers ask sellers to handle, since they represent existing damage. Section 2 items are more commonly treated as the buyer's future maintenance, though everything is negotiable and local custom varies a lot from market to market.

Second, look for the phrase "owner to repair" or "by others" scattered through the recommendations. These phrases mean the pest company's bid excludes that work. Floor coverings, tile, drywall texture and paint, roofing, and plumbing repairs frequently fall outside the pest company's scope. A report with a $4,000 bid might realistically carry $8,000 of total cost once you add the trades the pest company won't touch.

Third, understand that the inspecting company usually also sells the repairs, which is a genuine conflict of interest built into the industry. That doesn't mean the report is wrong, and most inspectors are honest professionals, but it's completely fair and normal to get a second opinion or competing repair bids on any large item. Repair-only contractors will often perform the same scope for meaningfully less than the inspecting company's quote.

Finally, check whether any items are marked for further inspection. Get those opened up and priced before you finalize negotiations if at all possible, because "unknown" is the most expensive word in real estate.

What "Clearance" Really Means

After Section 1 work is completed, the pest company can issue a certification, often called a "clearance" or a Notice of Work Completed. Lenders love this document, and sellers often order repairs specifically to produce it.

Just understand its limits. A clearance certifies that the structure is free of visible evidence of active infestation and that the completed items were done. It does not certify that the house will stay termite-free, that inaccessible areas are clean, or that Section 2 conditions were corrected unless that work was actually performed. Read the completion notice carefully to see exactly which numbered items were done and which were left open. It's common for a house to receive clearance while several Section 2 items remain untouched, and that's perfectly legal as long as the paperwork says so.

Red Flags to Watch for in the Report Itself

Beyond the findings, the report can reveal problems with the inspection. Be cautious when you see an unusually long list of inaccessible areas, especially if the areas listed (like the attic or the entire crawl space) are ones a thorough inspector normally enters. A one-page report on a 60-year-old house in a termite-heavy region should also raise an eyebrow, since older homes almost always show something. And if the report is more than a few months old, remember that conditions change. Termites don't check the calendar before moving in.

On the flip side, a long report is not automatically a bad house. Inspectors in some regions write everything down, including trivial items, and a ten-finding report where nine items cost under $200 each is a healthier situation than a three-finding report with one open-ended "further inspection recommended at the main bathroom wall."

Smart Questions to Ask After You Read the Report

Once you've gone through the document, a short call with the inspector is worth its weight in gold. Ask which findings they consider urgent versus cosmetic, since the written report legally has to treat everything with the same flat tone. Ask what caused each moisturerelated finding, not just what the damage is. Ask whether the recommended fumigation could be replaced with local treatment, and why or why not. And ask what they would fix first if it were their own house. Inspectors answer that last question honestly more often than you'd expect.

The Bottom Line

A termite report looks intimidating, but it boils down to three questions. What's actively damaged right now? What conditions are inviting future damage? And what couldn't the inspector see? Answer those three, put realistic numbers next to each item including the work the pest company won't do, and you'll walk into any negotiation knowing more than most people at the table.

At HomeWiz, we believe reading your own transaction documents shouldn't require a decoder ring. The more clearly you understand reports like this one, the better every decision in your home sale or purchase becomes. If you've got a termite report in hand and something in it still doesn't make sense, that's exactly the kind of question we built HomeWiz to answer.