Katie McBride's Blog
What Is The Disclosure Statement?
Disclosure statements are used in many of life’s situations. This is the place where the buyer is able to learn about the ins and outs of the property that they are about the buy. Examples of items that would be on a seller’s disclosure are:
- Water in the basement
- Updates made to the home
- Known pests
- Paranormal activity
- Death on the property
- Past fires
- Nearby major construction projects
- Title 5 sewerage issues
Disclosures Serves As Protections
The disclosure statement serves as a protection for both the buyer and the seller. From a buyer’s perspective, through this information, they are able to understand a bit more about the property that they are potentially buying.
On the seller’s side of things, the disclosure statement serves a s legal protection of sorts. The seller is obliged to reveal anything about the property that could potentially affect the value or affect the living conditions.
How Does The Seller Make The Disclosure
Each state and even each city within a state varies in the way a disclosure is conducted. The statement can be composed of dozens of documents that need to be signed by the seller. Other states have disclosure document forms that consist of a series of yes or no questions about the home. Sellers may also be required o present communications between neighbors, owners, and agents. In some states, the disclosure statement is valid for up to 10 years, allowing buyers to collect damages if something wasn’t properly presented on the statement.
How Do Sellers Know What To Disclose?
The basic rule of thumb is that if you know something about your property, you should disclose it. If you try to hide something, it could come back to meet you in the form of a lawsuit, even years later. Many states have legal requirements as to what should be revealed on these documents.
What’s Disclosed To Buyers?
The disclosure doesn’t have to be all bad. This document is also an opportunity for sellers to present any of the improvements that they have made to the home. Make sure that you include all of the upgrades, renovations, and improvements that you have made to the home that you’re selling. This can help to impress buyers as to how well you have taken care of the property.
It’s easy as the buyer to check some of these improvements as you can find out if the work was done with or without permits by checking with the city’s zoning reports. Work that was done without a permit may have not been completed according to code. This could pose some serious health and safety risks to you and your family.
Problems that you’ll want to disclose as a seller include pest problems, property line disputes, disturbances in the neighborhood, liens on the property, and appliance malfunctions.
Remember that the disclosure doesn’t substitute the buyer’s right to a professional inspection of the property. It’s important for buyers to know as much about a property as they can in order to be sure they’re making a good investment.
Shopping for a new home is difficult and time-consuming. With all of the homes listed for sale, it’s tempting to want to visit all of them. However, if you’re juggling house-hunting with your work and personal life, then you likely won’t have time to set aside many hours to visit several homes.
This is where you can use technology to your advantage. With free, modern tools online you can find out plenty about a house and the neighborhood it’s in without ever having to go and visit it. Better yet, you can do so in just a few minutes right from home.
In this article, we’re going to teach you how to become a real estate investigator from the comfort of your own couch, helping you save time while hunting for the perfect home for you.
Know what you’re looking for
While it’s okay to browse homes for pleasure, when it comes to getting serious about buying a home you’ll want to keep your search as specific as possible. Think about what you or your family need in a house and neighborhood, rather than focusing on idealized versions of those things.
A good way to do this is to sit down and make a list of your budget and the five most important things you’re looking for in a home. These could be things like distance to work, being in a certain school district, or having a certain number of bedrooms. Once you have these details in mind you can begin your search.
There are a number of search tools for locating homes near you. The key to searching, however, isn’t the tool you use but how you search. Refer to your list for things like room numbers, square footage, and location.
If you don’t come up with as many hits as you’d like, try setting up email or text alerts so you can be made aware of the new results for your area.
Once you have a list of about ten properties, you’re ready to start researching them further to see which sellers you want to contact to view the home.
Researching a potential home
Many people are surprised at the number of things you can learn about a home just from a Google search. However, Google will be an indispensable tool in your search for the perfect home.
Let’s start our search on Google Maps. Type in the address for the house you’re researching and see if there are any photos of the home that aren’t on the listing page. Next, enter the satellite view of the home to get an idea of the layout of the home and property.
While you’re in Google Maps, it’s a good idea to browse the local area for businesses, hospitals, schools, parks, and other services that might affect your decision. Then, set a driving route between the house and your place of work to find out how long it would take you to get to work if you moved there.
Once you’re done in Google Maps, head back to the Google search page and browse the results for the address. This could show you information on previous owners, prices, and crime statistics. All of this will be useful information in your search.
Repeat this search method for the rest of your homes on your list and you’ll be narrowing down potential homes to visit in no time.
A low appraisal is a possibility when you’re buying a home. This can happen for a variety of reasons. If it happens to you, don’t panic!
Once you get an offer accepted on a house you love, it may feel like a huge weight has been lifted off of your shoulders. As any seasoned homebuyer will tell you, this is only the beginning!
It can be tough for both the buyer and the seller when a deal seemingly falls apart due to an appraisal that comes in too low. This is a common occurrence and there are ways to work around it.
Reasons For A Low Appraisal
There are a few reasons for a low appraisal including:
Insufficient sales data for the area can often skew appraisal numbers
Lenders may only lend up to a certain percentage of the appraised value
If the appraisal comes in lower than what you offered for the purchase price of the home, you’ll need to come up with the rest of the cash upfront in order to purchase the property. There are other options for you if you do come into this situation.
The Appraisal Contingency
The appraisal contingency is built into your sales contract and is a protection for the buyer, allowing them to walk away without financial burden if the appraisal comes in too low. This allows you room for negotiation on the seller’s part if they really are motivated. The contingency clause isn’t a one-size-fits-all protection. Even with this clause, you could end up spending more out of pocket cash or walking away from the deal completely. It’s simply a protection.
What If The Appraisal Is Wrong?
The appraisal can be submitted for review. The appraiser would need to explain why they didn’t use comparable sales provided by the lender. The property can also be completely reevaluated. In addition, you can request a separate appraisal from your lender. The seller may even pay for the second appraisal in order to keep the deal from falling through.
Don’t Offer More Than You Think The Property Is Worth
When you base huge financial decisions on emotions, you could end up in a bad situation. Your offer that wins the house can quickly become a case of regret as a buyer. Many times in a tight real estate market, you’ll need to make decisions fast. If you have a general idea of property values and work with a realtor to make an informed offer, you’ll be in better shape to avoid a big headache. While you may be able to afford paying more than a house is worth, it’s not a smart financial decision.
Low Appraisals Are An Opportunity
A low appraisal should be thought of by the buyer as an opportunity to renegotiate the sale price of the home. This step in the home buying process is a protection for you as a buyer for one of the biggest purchases that you’ll ever make.
You have finally found what you believe to be the perfect home. Then, something rings off in your gut. Maybe it was poor communication with the seller. Maybe a big change happened in your own life in a short period of time. All you know is that you really want to back out of the deal. You might have a lot of questions. Is this possible? Are there consequences?
The short answers to these questions are yes, and yes. There is a possibility that you could be sued by your backing out of a deal. It’s rare that buyers are actually mandated to buy a home that they don’t actually want to buy. Sellers will, however, be able to keep any money that has already been paid as a deposit after a certain point in the dealings on a home sale. Sellers may also be awarded damages in some cases.
Legally Backing Out Of The Contract
There are a few circumstances where buyers may have a legitimate right to back out of a contract on a home. If certain contingencies weren’t met, as a buyer, you’re free and clear to walk away. These circumstances include:
- Financing falls through
- You couldn’t sell your former home
- Flaws in the home have not been disclosed
- Property boundary line issues exist
- Liens are against a home’s title
- The seller does not meet the terms for improvement
- Undisclosed uses exist for the land such as a pathway
If none of these reasons apply to you and you still have reservations about buying the home, you may need to sacrifice a huge chunk of money. The way that you exit the deal will all depend upon the contracts that were signed previously.
Other Buyers Are Waiting For The Home
If you are in a tight market and decide to back out of buying a home, you could be in luck. Often, if there’s a backup offer, it’s enough to satisfy a seller that at least the home will be sold promptly. However, don’t hold you breath when it comes to getting your deposits back. If you have already “promised” to buy a home, you can kiss the deposit goodbye, unfortunately.
Always Hire A Real Estate Attorney
Whether your state requires it or not, you should always hire a real estate attorney. These professionals can help you to read each and every line of the contracts that you’re signing when buying a home. They will make suggestions as to how you can protect yourself through the process along the way. It’s a good investment to hire a lawyer when you’re buying a home.
“It’s the 2017 U.S. spring home-selling season, and listings are scarcer than they’ve ever been. Bidding wars common in perennially hot markets like the San Francisco Bay area, Denver and Boston are now also prevalent in the once slow-and-steady heartland, sending prices higher and sparking desperation among buyers across the country.”Sam Khater, Deputy Chief Economist at CoreLogic went on to explain why buyers are flocking to the market in big numbers:
“In today’s market, many buyers think the trough in [interest] rates is over. If you don’t get in now, it’s just going to be worse later. Rates will be higher, prices will be higher, and maybe inventory selection will be lower.”In some markets, “thirty-five percent of properties are selling within the first week or two of hitting the market.” Homes are selling at a rapid clip in places like:
- Denver, CO
- Seattle, WA
- Oakland, CA
- Grand Rapids, MI
- Boise, ID
- Madison, WI
- Omaha, NE