Termite Damaged Stucco Molding
Termite damage stucco molding is pretty common in a situation
where the wood framing is even with the garage floor. In this case the
story is actually level with the wood framing creating even a bigger
chance for moisture to accumulate and destroy the framing.
This problem can be fixed quite inexpensively but as a home inspector you will have no idea what kind of damage is behind the walls. You can use the awl and tried to poke it through the damage stucco molding and to the wood framing.
If the wood awl stops and doesn't go far into the framing it is probably in decent shape, however if the awl goes into the wood framing there is a good chance it will have to be replaced as soon as possible.
This is an extremely difficult problem to fix long term. As the repairs are being made try not to repair them in the same manner as they were originally constructed. There are a few different ways to correct this situation in order to keep it from happening again.