I recently asked my sales manager if he could give homebuyers only one piece of advice, what would it be? He didn’t hesitate when he said, “Tell them to read everything.”
He recounted times when he’d given written material to clients and explained that the information could significantly influence the value of a property, only to have them skip the fine print. It’s heartbreaking to watch buyers go from being elated about their dream home to heartbroken about being saddled with problems they never should have had to deal with, simply because they didn’t bother to read the information presented.
I completely understand why people don’t read everything. There are hundreds of pages of information, from purchase agreements to reports to disclosures. It can feel overwhelming. People tell themselves they don’t need to read it because it’s all boilerplate anyway or because their REALTOR already read it, or maybe because they figure they can deal with any problems after they arise.
Unfortunately, while much of the language may seem like boilerplate, it is legally binding so you should know what you’re signing. Also, the best REALTOR in the world cannot know your innermost thoughts. There may be issues that do not seem problematic to some, but do seem problematic to you. And, once escrow closes, unless the seller fails to disclose certain information, you have gone past the point of no return. Before an escrow closes, you have leverage. Once it closes, any problems that come with the house belong to you and you alone. This is why it is so important that buyers review all relevant material and ask their REALTOR for explanations of anything that raises concerns or questions.
I know of a case where an elderly gentleman ignored his REALTOR’s advice to read the details of a solar agreement that left him with an unfair agreement. He said, “I don’t care. I’m old. I’ll die here.” What he didn’t think about was how the transaction would affect his family’s ability to sell the house after he passed away.
Sometimes people’s emotions get the better of them. Rather than asking more questions, they let things slide. If a seller mentions that there’s some water in the garage during the rainy season, don’t let that pass unexamined. During a hot summer day, it can be hard to imagine the house during a rainstorm, but “some water” is uncomfortably vague. Ask questions. How much water? How often?
Your REALTOR will give you several standard disclosures: the California State disclosure, the Mendocino County disclosure, the standard Transfer Disclosure Statement, both the buyer’s agent and seller’s agent visual inspections, and the seller’s property questionnaire, totaling more than 40 pages. And that doesn’t include the natural hazards disclosure book—no joke, it’s a book. It covers everything from earthquakes to lead paint, environmental contamination, radon gas, fire danger, flooding, asbestos, and whether there’s military ordinance nearby.
There are also advisories, such as recommendations to verify square footage measurements. Other advisories may recommend fire hardening, including updates to ventilation, siding and/or roofing material, windows with tempered glass, and more. If a structure was built before 2010 in a high-fire location, a fire inspection is required.
The long and short of it is that as a buyer, you should set aside time to read all the information. You should then schedule time to review any questions with your REALTOR. Your REALTOR will either answer the questions or refer you to the person who can. Sometimes, technical questions require an expert—engineer or lawyer or accountant, for example.
Be aware that when you sign a receipt for a disclosure or advisory, you are promising to read it. You generally have a couple of weeks to do so. I know a guy who sued his REALTOR claiming he never received one of the disclosures and swearing he would never have bought the house had he known about the information ahead of time. Sadly for him, he signed the receipt for the disclosure; he just never bothered to read it.
Sellers are legally obligated to disclose anything they know (or should have reasonably known) that could affect the buyers’ interest in the property. Smart sellers disclose everything they can think of. This prevents a buyer from coming back later and asking for their money back. If a seller willfully hides significant information and gets caught, it’s an expensive mistake. The seller not only has to repay the buyer for the cost of the house, any subsequent loan payments and property tax payments, he may also have to pay for remodeling and maintenance costs. And buyers can sue a seller for up to seven years from the point of discovery of a problem that should have been disclosed—not from the sale date, but from the discovery date.
If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.