Crescent City Real Estate News: January 2011

 

In a normal real estate transaction, buyers are provided with disclosures from the sellers. These disclosures are usually in the form of questions which allow a seller to disclose any and all of the problems they know about which would affect the home. If part of the purchase contract, the seller is obligated to truthfully tell the buyer all defects/negative conditions associated with the property.

This could include:

Plumbing Leaks
Deferred Maintenance
HOA Rules
Neighborhood Noise

The list can be quite extensive...and in California includes an area to discuss "material facts or defects not otherwise disclosed to the buyer." It's very clear that the intent is to give the buyer all information they need to make an informed decision....and if the sellers withhold information they have, they can be held liable for damages. But this does not apply to bank-owned properties (REO).

In California, foreclosed properties are exempt from making these disclosures for the simple reason that the bank has never lived in the home and as such should have no knowledge of defects and/or past problems. Up to a point.

I have a client who purchased a REO a year ago and did not get any disclosures. We performed a home inspection and did our due diligence. He moved in and all seemed well. Then the back slope started to move. As they started to work on fixing the problem (the retaining wall was incorrectly built) they happened to contact a geological engineer who had given an estimate to the BANK prior to the sale. What?

Yes....this property had been in escrow before, and the buyer had backed out when they found that the hill was unstable (there were no visible signs of this, but the previous buyer had a personal reference which alerted him to this potential).

The bank did not disclose this.
The listing agent did not disclose this.

My buyer sued both....claiming that although they were not obligated to provide normal seller disclosures and property questionnaires, if they discover a defect, they are liable to disclose this information. Clearly both the lender and the listing agent were aware that the slope was moving, and the cost to repair. The judge agreed and between actual damages and punitive damages.....well, let's just say he paid off his second mortgage and had a very nice holiday. :).

The basic rule of real estate is still intact.....Disclose, Disclose, Disclose!

 

Karen Fiddler
Broker/Associate
The Fiddler Realty Team/eVantage Real Estate
Lic # 01494165

www.searchfororangecounty.com

Serving all of Orange County, California Real Estate!
Buyer's Agents, Listing Agents, Short Sales, REOs, Equity Sales, Investors

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Yes, there are $900,000 breakfasts. There are $400,000 out of town guests. There are also $600,000 naps. Have you ever seen a $300,000 pack of cigarettes? I have. I personally witnessed a $900,000 litter box once this past spring. I'll never forget the $675,000 dog either. 

What I am referring to are the banal, small indulgences many home sellers grant themselves that cost them the sale of their home to another more motivated homeowner. This morning, an out of state buyer asked me to add on two homes to the tour we had scheduled, and the homes we were seeing weren't far shy of $1 million. There is still 6 inches of snow, it is cold and windy, and they are serious buyers or they wouldn't be out in this weather on a Monday. 

One home declined the showing with 2 hours' notice. Now, as a listing agent I see both sides of this; 2 hours notice can be an inconvenience. They might not want to run around and straighten up. There could be more compelling reasons, such as a sick child or home dialysis. After several months of bending over backwards for inconsiderate mud trackers I can see how people wouldn't be up for that again. It's like dating. By the time I was in my early 30's I was so sick of asking first dates about social small talk I wanted to put a voice-activated tape recorder on the table and eat in peace. I get it. But that's how it is. And all too often viewings are denied because they just aren't up to it on shorter notice. They might be having their first quiet breakfast on the Monday after 2 straight frantic holiday weekends.  

But if people with close to $1 million to spend are going to drive in from out of state in the snowy winter to see your house and you say no out of convenience, that coffee had better be mighty delicious. Those croissants should be laced with ambrosia. That quiet morning after 2 weeks of holiday madness might be well earned and hell to give up for people to walk through your home, but I've got news for you: it may well have cost you every dime of $900,000 to say no and stay in your bathrobe. 

Buyers don't mean to be bullies when they request showings. They can tweak their criteria and see something new and worth seeing on their smart phone when they are taking their ride up here. They have money to spend. And they are looking to spend it. Maybe even on your house, if you let them. They are going to look at something when they go out, and if they like it, they'll buy it. And then they are gone. They simply have too many other choices. 

There is a natural tension between the urgency of million dollar buyers and the desire for million dollar sellers to not be living in a constant state of accommodation. But in this market, the buyers win the stalemate.

Buyers, my dear people, are rare in this market. 

Very rare. 

As my home stager friend Marie Graham says, the way we live is very different from the way we sell our home. It is a hassle. It is intrusive. It takes us away from our routine. But the sums of money involved ought to motivate us to bite the bullet and let the folks in. Yes, it would be nice to have a week's notice, preferably on a day when your kid isn't home from college or the laundry isn't piled up. But buyers who are willing to wait a week aren't what I'd call urgently interested, would you? Someone who found you today and wants in today is a hot buyer. And accepting the showing request from a hot buyer could be a trip to the drugstore or coffee shop that pays you $900,000.  

The prices I am discussing reflect the Westchester County, NY housing market. Your mileage may vary. 

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