Home-Buyers Beware: Your Decisions Today Can Cost You Tomorrow!

July 27, 2010

by christiborden

Today is the day! You have spent hours and hours looking for and now think you have found the perfect home, right? Who cares if your Realtor has maybe mentioned a few aspects of the property that might have a negative affect on your market value when and if you sell. You love the home, the price is right and you are certain that any issues mentioned will be minimized in the future. No need to worry about that now, right?

Before you make that leap, please keep in mind that your Realtor should be an expert in the area you are purchasing and should be aware of conditions that could negatively impact your home’s value and marketability. I am not speaking of state required disclosures but simple items that historically have made a difference between identical homes selling quickly and at market value or languishing on the market and selling for far less than the competition.

Why is it that two homes can be in the same community, be of similar size and age, maybe even the same floor plan, and still differ widely as to market value and marketability?

First and foremost, the old mantra of “LOCATION, LOCATION, LOCATION” still stands true. There are simply some location features or benefits that buyers will pay more for and conversely, there are negative features that will drive future buyers away forever. These factors can differ from area to area and what turns off a buyer in the suburbs is simply an unavoidable fact of life in urban environments and visa versa.

Adjacent communities could vary widely in average sales price depending upon the amenities they offer, actual builders constructing the homes and the developer’s reputation for upholding their resident’s market value. A Realtor’s knowledge of the community is crucial to making an informed decision.

In Katy, TX – We have communities that back to one another yet the same home by the same or similar builder will cost thousands more on one side of the fence than the other? Why is that? Strength and reputation of community can affect sales values. And guess what? If the home costs more at purchase, chances it may sell for more than the competition in the future. This is not a given but should be considered if you think saving a little money today is your only consideration.

Items to consider with regard to your lot location that can have a direct negative impact on your future market value: power lines in backyard, backing or siding to a busy roadway, backing to MUD water storage facilities, backing to commercial developement, etc.

Alternatively, favorable features that could be a positive in the future: backing to green space, golf course, lake or water, wooded areas, etc. Most builders or developers will charge a premium to purchase a lot with these positive features but you usually recoup this expense when you go to sell.

So what is a buyer to do? Just take a step back and consider carefully that it is not only the home you purchase but your surroundings as well. And it is far easier to change things you may not love about the home itself than to change things that might be an external detriment down the road.

Ask your Realtor their opinion… and happy House Hunting!


Seller’s Disclosure: What does a seller have to disclose to a buyer?

August 1, 2009

in a word: EVERYTHING… 

In the bad old days, the seller did not have this requirement placed on him and it was a case of Caveat emptor – “Let the buyer beware!”. Times have changed and the onus is now entirely on the seller to make known any and all material facts regarding the condition of the property he or she is selling.

In real estate transactions, the root cause for most problems is lack of disclosure by the seller. Funny thing is… most of the time it is entirely unintentional. Why would anyone in their right mind try to hide an issue that will come out anyway through inspections, diligent research or nosy neighbors happy to share any and all facts known or rumored about your home. Yes, your nosy Nellie next door did happen to see the foundation repairman and the roofer two years and will certainly make sure your buyer knows all about it – in great detail.

One interesting disclosure item that always causes issues is disclosing a prior death on the property. Now, deaths by natural causes, suicide, etc. are not required to be disclosed but those caused by a defect of the property or criminal activity – yes, DISCLOSE, DISCLOSE, DISCLOSE! Should you let the buyer know about a death that is not necessarily required? That is a judgement call you will have to make. Example: my brother-in-law bought a home in Austin a few years ago. When we visited, being the chatty gal that I am, I stopped by the neighbor’s house to introduce myself and learn more about the area. I found out in less than one minute that the prior owner had committed suicide in the backyard. Now, that is not a required disclosure item but… should it have been shared? Probably. Would it have caused a termination in the contract… Probably not. My feeling about the matter is: Would you want to learn about something of this nature from the seller or later from the neighbors? 

When I work with sellers, I deliver to them the Seller’s Disclosure form, a 5 page document that is required by the State of Texas to be filled out to the best of the seller’s ability and given to the buyer of any property within a mandated time frame according to the actual contract. There are individuals who are exempt from the use this form: Banks or other entities who own foreclosure properties, Probate administrators, etc. but the normal seller in the State of Texas must render this form… and that is where he/she gets in trouble.

I am often asked by my sellers…”Should I disclose this or that…?” As your Realtor, I am not allowed to assist in the completion of this form but my answer to that is always the same… a resounding YES! If the question was brought up in the seller’s mind, then YES, disclose whatever it is. The litmus test is you should disclose any and all items that if not disclosed, could cause the buyer to reconsider his offer. Meaning, if the non-disclosure of an item would cause your buyer to either make a different offer or pass on the property, then yes, DISCLOSE, DISCLOSE, DISCLOSE. Even if it was a roof repair 20 years ago…Again, I repeat… IF IN DOUBT, DISCLOSE. 

You can always explain your answer. I have had clients add several pages of explanation to the disclosure form, which is entirely appropriate. The disclosed item may have no affect at all on a buyer’s interest in a property. In fact, most homes (like people) have a past and as long as the issues are not on-going or improperly addressed, your buyer will proceed as usual. But by making your disclosure, your buyer simply will not have a reason to come back to you later if any and all matters are disclosed up front.

Another important item to disclose is any inspection report on the home within the last 4 years: structural, mechanical, environmental, termite, etc. And if you had a major issue that needed remediation (mold, for example), that really should always be disclosed even if completely re-mediated. You can again attach your explanations of repairs made and receipts for those repairs.

Disclosure items are a mine field of trouble if handled incorrectly so the best road to take is always the high road. Remember, you will be a buyer someday, too and will want your future seller to treat you as you should treat today’s buyer for your home.