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Old 11-18-2013, 04:37 PM
 
Location: Needham, MA
8,525 posts, read 13,906,155 times
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Quote:
Originally Posted by masshawk View Post
I think a diligent buyer would get and pay for their own inspection no matter what, but I've also heard that sellers sometimes do their own inspections before selling. So instead of waiting for the buyer's inspector to find something wrong and have to lower the sale price, they can know the problems already and have a chance to fix it themselves, and be more confident in their asking price? I don't know if that's a common practice or not though.
That mostly happens on HGTV and not in real life (at least around here). I could round up 10 inspectors and all have them inspect the same house and I would get 10 different reports. So, every inspector finds different things to put on their report. A seller could hire an inspector for a pre-listing inspection, but what's the point? The buyer's inspector will likely find other defects and since you would have to disclose any defects found during your inspection you've paid to fix things that may or may not have been found by the buyer's inspector. Additionally, I could show one of those reports to 10 different buyers and each one is going to prioritize the items on the report differently. You could spend money fixing something that the person who ultimately buys your house wouldn't even care about. Basically, I'm saying I don't believe in pre-listing inspections.
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Old 11-18-2013, 07:05 PM
 
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I would agree on a lot, except that I disagree with notion that 10 different inspections will uncover 10 completely different things. Most of the time they will have fairly similar findings with some variations on the severity and detail of the issues. Better inspectors are more savvy, and more detail oriented, so less can escape their attention. They might find little bit more. But, in general they all look at the same things.
And yes, here and there, there are some inspectors that are complete over the top drama kings, but they are thankfully not found in huge numbers.
I look at seller disclosure as an excellent tip on seller honesty, including their agent's. Ideally I would think that is in sellers own interest to understand potential issues their home may have, and enlist someone to inspect prior to home going on the market. Especially important when home is the same family for a very, very, long time.
In "hot" places, sellers have an upper hand, and will care less to inspect and/or update their home. Since many buyers are desperately throwing their money at anything livable at present in MA's always favorite places to live, I do not blame sellers for being lot more cavalier about it.

However, never, ever save on inspections. If you need a specialist on top of inspector, go and get him/her in the place. Better to spend some money upfront, than to buy a huge issue down the road. Every area of the US has its own unique weather, structure, pest, maintenance issues that buyers should get familiar with. Being a homeowner in CA has not much in common with being a homeowner in MA.

MA is not very "hard" on sellers disclosures, CA is complete opposite. It is very curious that in this state, where everything is almost over-regulated, RE transactions are still happening like they happened 50-75 years ago, and with burden still on the buyer to "prove" that there is something (possibly) wrong with the place. Sellers are often not held liable, even if they fail to disclose serious defects (for the most part). This is why good inspection and good contractor are very necessary when looking at homes.


5 Things You Should Know About Real Estate Disclosures





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Date:November 15, 2011 | Category:Tips & Advice | Author:Brendon DeSimone


It’s standard practice in real estate to give a home a fresh coat of paint before putting it on the market. Nine out of 10 times, the intention is to show the property at its best. But every so often, the seller paints the house in hopes of covering something up.
That’s why I always triple-check the disclosure documents of newly painted houses, to ensure there were no recent leaks or other damage. It’s the seller’s obligation to disclose these kinds of issues. And it’s the buyer’s responsibility to be completely aware of past problems before signing on the dotted line.
Whether you’re a buyer or a seller, here are five things you should know about real estate disclosures.
1. What is a disclosure?

Disclosure statements, which can come in a variety of forms, are the buyer’s opportunity to learn as much as they can about the property and the seller’s experience in it.
Potential seller disclosures range from knowledge of leaky windows to loud neighbors to information about a major construction or development project nearby. Not only do disclosure documents serve to inform buyers, they can protect the sellers from future legal action. It is the seller’s chance to lay out anything that can negatively affect the value, usefulness or enjoyment of the property.
Leaking windows — bad coincidence?
I once had a buyer call me after the first rainstorm of the season. The windows in the master bedroom were leaking. We checked back on the disclosure documents from the sale and there wasn’t any mention of the leaks. Nothing showed up in the property inspection report at the time of escrow, either.
Unfortunately for the buyers, I said, this is part of homeownership. This could be the result of something that was building over time. I thought that was the end of it. The same client called back a few weeks later. They had workers out to check on the siding. That prompted their neighbor to inquire what they were up to. According to the neighbor, the previous owner of my client’s property had the same siding issues and had discussed it with the neighbor.
Given this new information, it was clear the previous seller had not properly disclosed. I had the buyers do more investigation, get bids and understand what the issue was. Armed with the knowledge of the neighbor and the approximate costs, we went back to the seller, through his agent. Though it did not turn into a lawsuit, the seller took responsibility and the situation was resolved quickly and fairly.
But too often, the lack of proper disclosure can result in a lawsuit. I heard of a story in which a buyer bought a house, with the seller disclosing that a kitchen renovation was done without permits. A few years later, that buyer went to sell the property but didn’t disclose that the previous owner had renovated the kitchen without a permit. The new buyer wanted to do some electrical work with a permit. The city inspector discovered that some things had not been done to code. The inspector dug deeper and realized that much of the kitchen renovation (both plumbing and electrical) was not to code. The new buyer was on the hook for ripping out the kitchen and doing it over. A lawsuit arose between the current owner and the second seller for not disclosing. The original sellers had covered themselves, but the second seller had not.
2. How does a seller go about making a disclosure to the buyer?

Disclosure laws vary from state to state, even down to the city and county level. California has some of the most stringent disclosure requirements. Often, sellers there are required to complete or sign off on over 50 pages of documents, such as a Natural Hazards Disclosure Statement, Lead Based Paint Disclosure, Advisories about Market Conditions and even Megan’s Law Disclosures.
Depending on where you live, sellers can be on the hook for what they disclose (or fail to) for up to ten years. I’ve seen agents and sellers take all types of approaches when dealing with property disclosures. More than anything, I always tell sellers to err on the side of caution. If you know it, disclose it. If you try to hide something, it can come back to bite you long after the sale and it is just not worth it.
Disclosure typically comes in the form of boilerplate documents (put together by the local or state Realtor association), where the seller is responsible for answering a series of yes/no questions detailing their home and their experience there.
Aside from the boilerplate documents a seller is required to complete, if there is any written (or sometimes verbal) communication regarding something negative about the property, it should be disclosed to the buyer. For example, there was a property for sale with a dispute over a tree on the property line and whose responsibility it was. The neighbor faxed a letter to the seller’s real estate agent documenting the dispute. This immediately became a disclosure item that both the seller and buyer needed to sign off on.
Bottom line: Disclosure statements are legal documents that can stand up in court.
3. What do sellers typically disclose to potential buyers?

The work and upgrades sellers have done to their property are a common disclosure, whether the work was done with or without permits. If done with permits, buyers are advised to cross check the seller’s disclosure with the city building permit report. Doing work without the city signing off with a permit is a key disclosure. If the work was not approved by the city, it may not have been performed to code and may cause a fire or health hazard. Buyers should independently investigate any non-permit work that was done.
Other common disclosures include the existence of pets, termite problems, neighborhood nuisances, any history of property line disputes, and defects or malfunctions with major systems or appliances. Disclosure documents often ask sellers if they are involved in bankruptcy proceedings, if there any liens on the property, and so on. Failure to disclose can result in a messy conflict with the buyer after the sale.
Some disclosure documents are very detailed. For instance, among the questions posed by the San Francisco Association of Realtors disclosure statement are:
  • Is there any non-tempered glass on shower or sliding doors?
  • Have there been any unusual odor problems in the neighborhood?
  • Was there any death on the property in the last three years?
4. Is a disclosure the same as an inspection? Are the two related?

A disclosure is something given to the buyer by the seller documenting their knowledge of the property. It is not the same thing as an inspection; because there are things the seller may not be aware of that an inspection brings to light.
This is why a property inspection should always be done by the buyer while in escrow. The inspector will check the property out from top to bottom, many times verifying what the seller has disclosed but sometimes bringing to light new issues. Often, we will see sellers hire a property inspector before going on the market. It seems backwards, but this is the sellers’ opportunity to hire an independent party to inspect the property, in case they missed or were not aware of something.
5. When does the buyer typically receive a seller’s disclosure statements?

In most markets, disclosure documents are provided to buyers once the seller has accepted their offer. In addition to their inspections or loan contingency, the buyer has an opportunity to review the seller’s disclosures. If the buyer discovers something negative about the property through disclosure, he can usually back out of the offer without losing his escrow deposit.
In some markets, sellers provide these disclosures to the buyers even before they receive an offer. Some sellers prefer to have buyers know everything they need to know up front. This is also smart because it saves everyone time, hassle and expense by preventing deals from falling apart once they’re in escrow.
Buyers are required to sign off on disclosure documents and reports. So it’s important to review them carefully and ask questions if you need to.
Full Disclosure Up Front is the Way to Go

In some ways, providing full disclosure can actually help a seller. As a Realtor reviewing disclosures with potential buyers, I like to see a comprehensive set of disclosure documents. It shows that the seller is thorough and upfront. This goes a long way toward giving buyers peace of mind, and in this market, anything you can do to move buyers off the dime is worth considering.


Brendon DeSimone is a Realtor® and real estate expert based in San Francisco and New York. He is a contributor to Zillow Blog, has collaborated on multiple real estate books and is often quoted by major media outlets. Follow Brendon on Twitter.

Obviously, this was written in 2011 when sellers did not have such a great time as today, but it still holds true, never the less.
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Old 11-18-2013, 07:22 PM
 
1,768 posts, read 3,219,290 times
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Quote:
Originally Posted by Parsec View Post
That's how it's supposed to work right? A normal economic cycle lasts about 4-5 years from peak to peak or trough to trough.
Nothing about economy in the US is like normal. Bubble to bust in 4-5 years, and then over again is an abnormal economy. And RE is especially abnormal right now because it is manipulated, and propped by Fed policies with clear intention of making it to appear healthier than it is.There is no free market.
Only Potemkin village, and Potemkin stock and RE rally.
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Old 11-19-2013, 08:49 AM
 
Location: Needham, MA
8,525 posts, read 13,906,155 times
Reputation: 7908
Quote:
Originally Posted by kingeorge View Post
I would agree on a lot, except that I disagree with notion that 10 different inspections will uncover 10 completely different things. Most of the time they will have fairly similar findings with some variations on the severity and detail of the issues. Better inspectors are more savvy, and more detail oriented, so less can escape their attention. They might find little bit more. But, in general they all look at the same things.
I never said the reports would be completely different. I said they would be different. Still, my point is valid. 10 different inspectors will have 10 different (not completely different but different) lists of defects in their report. Also, if you do a pre-listing inspection you have two choices:

1. You can fix all the defects found during the pre-listing inspection or
2. You can disclose all the defects found during the pre-listing inspection

Most people opt to fix defects so as not to turn off buyers. The issue with that is the next inspector who comes in will likely find other defects which you'll have to fix or give a credit/price reduction for. Who knows if the second inspector would have found the defects the first inspector did? Who knows if the buyer would have cared about all the defects you paid to fix after the first inspection? From a financial standpoint, it makes more sense to see what the buyer's inspector comes up with and what the buyer actually cares about. I've seen major problems in a house and the buyer has asked for pennies on the dollar of what it costs to repair those issues. This isn't HGTV people. Your house doesn't have to be perfect to sell.

Regardless, most sellers know in their heart of hearts the condition of their home. They know if they've hired reputable plumbers, electricians, etc to fix issues in their house or if they had Uncle Eddy take care of it with some bubble gum and bailing wire. Sellers know what does and doesn't work in their home for the most part because they live there and use the house.

Quote:
Originally Posted by kingeorge View Post
And yes, here and there, there are some inspectors that are complete over the top drama kings, but they are thankfully not found in huge numbers.
I'd like to know what you feel gives you the knowledge to make this statement.

Quote:
Originally Posted by kingeorge View Post
I look at seller disclosure as an excellent tip on seller honesty, including their agent's. Ideally I would think that is in sellers own interest to understand potential issues their home may have, and enlist someone to inspect prior to home going on the market. Especially important when home is the same family for a very, very, long time.
In "hot" places, sellers have an upper hand, and will care less to inspect and/or update their home. Since many buyers are desperately throwing their money at anything livable at present in MA's always favorite places to live, I do not blame sellers for being lot more cavalier about it.
FYI seller disclosure forms are not a requirement in this state. I see them from time-to-time but more often than not in my area they are not used. This has nothing to do with honesty or integrity. Defects are disclosed on MLS in the disclosure section quite often but the boiler plate form is rarely used.

Also, again, most people really know what's going on in their house if they've been living there for more than a year. I wouldn't waste my time or my money on a pre-listing inspection. This a caveat emptor state (buyer beware). The onus is on the buyer to make the finding of anything unknown by the seller. Be honest about what you know but no need to spend your money making the house like new. Most buyers expect to deal with some wear & tear.

Quote:
Originally Posted by kingeorge View Post
However, never, ever save on inspections. If you need a specialist on top of inspector, go and get him/her in the place. Better to spend some money upfront, than to buy a huge issue down the road.
EXCELLENT advice. You're already spending hundreds of thousands on the house. What's a few hundred dollars extra to make sure it's in good shape. Skimping on inspections is penny wise, pound foolish.

Quote:
Originally Posted by kingeorge View Post
MA is not very "hard" on sellers disclosures, CA is complete opposite. It is very curious that in this state, where everything is almost over-regulated, RE transactions are still happening like they happened 50-75 years ago, and with burden still on the buyer to "prove" that there is something (possibly) wrong with the place. Sellers are often not held liable, even if they fail to disclose serious defects (for the most part). This is why good inspection and good contractor are very necessary when looking at homes.
If there were any state in the union I would not want MA to emulate in any way (real estate aside), it is California. That state is in rough shape and it's that way for a reason.

Anyway, CA's real estate disclosures are a joke. You have to disclose absolutely irrelevant things like if someone died in the house within the last decade or if you believe there are ghosts in the house. Yes, that's what we should do in this state.

Quote:
Originally Posted by kingeorge View Post
Obviously, this was written in 2011 when sellers did not have such a great time as today, but it still holds true, never the less.
This article is good but written at an extremely high level in terms of detail because it was written for a national audience. As it says in the article, disclosure laws vary from state-to-state which is why the article is rather vague.
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Old 11-19-2013, 09:27 AM
 
Location: 42°22'55.2"N 71°24'46.8"W
4,848 posts, read 11,751,074 times
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Quote:
Originally Posted by MikePRU View Post
FYI seller disclosure forms are not a requirement in this state. I see them from time-to-time but more often than not in my area they are not used. This has nothing to do with honesty or integrity. Defects are disclosed on MLS in the disclosure section quite often but the boiler plate form is rarely used.
I noticed every house I saw listed by Coldwell Banker also had a seller disclosure form, but it was hit or miss for other listing agencies. I didn't fill one out when I sold my house.

Quote:
Originally Posted by MikePRU View Post
Anyway, CA's real estate disclosures are a joke. You have to disclose absolutely irrelevant things like if someone died in the house within the last decade or if you believe there are ghosts in the house. Yes, that's what we should do in this state.
I actually asked "Has anyone ever died in the house" before I made an offer on my house. Call me superstitious
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Old 11-19-2013, 09:32 AM
 
5 posts, read 7,094 times
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Once again the market finds more foreclosures due to ARM's that were written three and five years ago, sudden loss of employment, etc. Oftentimes these properties can be had at a discount.

I bought a house on Nantucket (Sconset) that was listed at $990,000. The seller accepted my offer of $900,000, all that was need was a little landscaping, and a coat of sealer on the driveway. I flipped it early Summer for $1.3M to some yutz from NYC.
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Old 02-24-2014, 12:51 AM
 
Location: Winchester
229 posts, read 382,514 times
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Following up on quick sales, 12 Hillcrest Road in Needham was listed 4 months after the seller bought it in Aug-2013, and it just sold for $22K more than what the seller paid. But of course, this isn't enough to cover the seller's transaction cost.
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Old 02-24-2014, 08:45 AM
 
Location: Needham, MA
8,525 posts, read 13,906,155 times
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Quote:
Originally Posted by 3cents View Post
Following up on quick sales, 12 Hillcrest Road in Needham was listed 4 months after the seller bought it in Aug-2013, and it just sold for $22K more than what the seller paid. But of course, this isn't enough to cover the seller's transaction cost.
Thanks for bringing up this example. I can't say if there was any change in the condition of the house during that time because the 2013 sale was not through MLS so there are no photos from that point in time available. The reason I brought up the example that started the thread is because I knew with certainty that the house was generally in the same condition during both sales.

Anyway, looking back at the sales history for 12 Hillcrest is an interesting exercise in and of itself as it's changed hands a number of times in the last 14 years.

2014 - $680,000
2013 - $658,000
2006 - $645,000
2001 - $520,000
2000 - $220,000

Being that there was a short time frame and a large jump in price between the 2000 & 2001 sales, I suspect that this was when the home saw all the upgrades we now see in the photos.
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Old 02-24-2014, 09:37 AM
 
Location: Columbia SC
14,198 posts, read 14,556,677 times
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I truly understand location, location, location but here is an example of what $650K buys in one of the more upmarket suburbs of Columbia SC:

118 Waters Edge Dr, Lexington, SC 29072 - New Home for Sale - realtor.com®

Note on a lake with a boat dock.
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Old 02-24-2014, 09:56 AM
 
7 posts, read 16,715 times
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Speaking of location, I remember 12 Hillcrest Road and it was a rare "drive by" for us. After making a trip for an open house, we will usually take a peek inside even when seeing the house from the outside drops the chances we'll like it.

However, 12 Hillcrest Road is right next to the parking lot of a bakery. We're willing to make some sacrifices and not expecting something like the SC home @johngolf linked to, but that was just too much to handle when spending nearly $700K.
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