A termite (WDO) report is its own step in a real estate transaction — separate from the general home inspection. Here's what it covers, who pays, and how it affects your close.
When a home changes hands in Southern California, a termite report is almost always part of the deal — and it trips up buyers and sellers who assume it's covered by the general home inspection. It isn't. A WDO (Wood-Destroying Organisms) report is its own step, performed by a licensed structural pest control company, and it can directly affect what gets fixed before close and who pays for it.
Here's what the report actually is, how to read it, and how it fits into a transaction.
What a WDO Report Is (and Isn't)
A WDO report — also called a termite report or escrow report — is a formal, standardized document a licensed inspector prepares specifically for a real estate transaction. It covers wood-destroying organisms and conditions: termites (drywood and subterranean), wood-boring beetles, fungus/dry rot, and the moisture conditions that lead to them. It is not the same as a general home inspection, which looks at the roof, plumbing, electrical, and overall condition but does not certify for wood-destroying pests. Many transactions involve both, done by different professionals. If you want the full picture of what the pest inspection itself covers, our post on what a termite inspection includes walks through it.
Section 1 vs. Section 2 — the Part That Drives the Deal
Every WDO report sorts findings into two categories, and understanding them is the key to reading the report:
| Section 1 | Section 2 | |
|---|---|---|
| What it means | Active infestation or existing damage | Conditions *likely to lead* to infestation/damage |
| Examples | Live termites, fungus damage, past damage needing repair | Earth-to-wood contact, leaks, poor ventilation, cellulose debris |
| Effect on the deal | Usually must be corrected before close (lenders often require it) | Recommended, but often negotiable |
Section 1 items are the ones that typically hold up a close — lenders frequently require them cleared. Section 2 items are preventive and more negotiable. Our deeper post on Section 1 and Section 2 reports breaks down how each is handled.
Who Pays?
There's no fixed rule — it's negotiable and varies by market and contract. Commonly the seller pays for the report and Section 1 corrections (since a clear report helps the sale), while Section 2 items get negotiated between the parties. In a competitive market that can shift. The important thing is that it's a line item to negotiate deliberately, not assume. Whether you're the buyer or the seller, our real estate termite inspection page covers how we work with agents and escrow on timing and clearances.
Timing and Clearance
The report needs to happen early enough that any required repairs can be completed and re-inspected before the closing date. The sequence is usually: inspection → report → corrections (treatment and/or repair) → re-inspection → a clearance certificate confirming the Section 1 items are resolved. That clearance is often what escrow and the lender are waiting on, so scheduling the inspection promptly once the deal is in motion protects your close date. Using a company that does its own inspection, treatment, and repair keeps that chain under one roof instead of coordinating across three vendors against a deadline.
For Buyers Specifically
If you're buying, the WDO report is one of your best windows into the true condition of the home's structure — read it, don't just file it. A clean report is reassuring; a report with significant Section 1 findings is leverage and information, not necessarily a dealbreaker. Our post on termite inspection before buying a home covers what buyers should watch for.
The Bottom Line
Treat the WDO report as its own deliberate step in the transaction — scheduled early, read carefully, and negotiated on purpose. Whether you're listing or buying, a free inspection gets the process started, and if it's tied to a sale we can turn around the formal report and any clearances on the timeline your escrow needs.