Not to be snarky, but there are a whole lot of people who don’t work in the real estate industry who think they know everything there is to know about buying and selling a home – from the lending process to the closing. Most of them gleaned this vast knowledge base from having bought or sold a home in the past.
I’ve had my hair cut and car repaired in the past but still know little about the intricacies of either. Maybe it’s just me . . .
What real estate “experts” don’t know, however, could end up costing them, dearly. Do yourself a favor. When you’re working with a real estate agent, use him or her for all he or she is worth. Pick their brains, down to the last bit of gray matter. If in doubt about anything, ask, regardless of how “stupid” you think the question may be.
Let’s take a look at three scenarios illustrating real-life consequences of thinking you know everything.
1. We didn’t want to rent a storage unit so we just shoved all our stuff into the garage. Nobody looks in there, right?
Actually, nearly 90 percent of home-buyers rate the garage as “very important” to them so you can pretty much count on most of your buyers taking a peek into yours.
Not only that, but 86 percent of homebuyers crave “garage storage,” according to the National Association of Homebuilder’s (NAHB) “What Home Buyers Really Want” consumer preference survey.
How will prospective homebuyers envision the storage capacity and capabilities of your garage when it’s stuffed with boxes and excess furniture? So, no, it’s not ok to use the garage as a storage unit while the home is on the market. Ideally, you’ll spiff it up – and stage it.
2. This house looks fine to me – to save money and time, should I skip the home inspection?
Bill Loden, former president of the American Society of Home Inspectors and owner of Insight Home Inspection, LLC in Madison, AL (yes, you read that right, Madison, Alabama), claims that about 10 percent of homebuyers waive the home inspection.
He goes on to tell Maggie Overfelt of CNBC that "It takes a trained eye to be able to see the problems that can exist in a home." Of course, the professional home inspection is a visual one, so Loden cautions that the home may contain "latent defects that inspectors cannot see."
The price of a home inspection varies, depending on the size of the home, its age and other factors, but the average cost of a home inspection in Madison is $384 – a small price to pay to avoid huge expenses down the line to remedy situations you didn’t cause. And, really, if your budget squeaks when it comes to the price of a home inspection, should you be buying a house?
3. If I tell the truth about what’s wrong with the home, nobody will buy it or I’ll end up selling it for too low of a price. I’ll just check all the “no” boxes on the disclosure statement.
How low is “too low of a price?” Because not disclosing issues that could affect the buyer’s health, safety and enjoyment of the home or that would adversely affect the home’s value may land you in court – even up to 10 years after you sell it.
Then, it could end up costing you loads of money or, in one sad case, your freedom. But, we’ll get to that in a minute.
When you list your home for sale in Madison you’ll be required, by law (Section 709.02 of the Wisconsin Statutes), to disclose to the buyer all known issues with the home. You will do this on the Real Estate Condition Report, a form full of questions about everything from defects in the roof to the existence of radon or mold in the home.
It may seem counterintuitive to tell the buyer things that may make him or her back out of the deal. But that is the worst that will happen if you’re honest. The worst that can happen if you’re less-than honest is best illustrated by the many court cases involving nondisclosure in real estate transactions.
A man bought a house only to find out later that the home is not on the city sewer but on a septic system. A Santa Clara County (California) Superior Court awarded the homebuyer damages, attorney’s fees and costs after finding the defendants guilty of negligence, negligent misrepresentation and fraud.
Then, there is the case of a seller who failed to disclose a carbon-monoxide spewing driveway heater. There was evidence that he deliberately kept the knowledge of this problem from potential buyers. His negligence resulted in the death of three members of a family of four (the people he sold the home to). The seller was convicted of involuntary manslaughter and sentenced to four years in prison. He and a plumbing company and utility company were also sued in civil court and the infant that survived will be $3.2 million richer as an adult.
Turn off the TV, take your time when filling out the form and answer every question honestly.