When you cruise through open houses, you see them—big, fat disclosure packets full of information about the property you’re looking at.  Their purpose is to help the Seller move their property quickly and enjoy a smooth, easy sale by encouraging buyers to make clean offers with few contingencies.

Buyer’s Remorse

When a buyer balks after getting into contract, it’s usually over a property’s physical defects– like a leaky roof called in a contractor’s report, or the dry rot in the back porch stairs called by their termite inspector. If the contract allows it, buyers will walk away or attempt to drive down the purchase price over these kinds of items.

Selling? Consider pre-inspections. . .

To avoid this scenario, Sellers will usually get a termite report up front and sometimes even order a contractor’s inspection before putting a property on the market. These reports then become part of the disclosure package and available to any prospective buyer who wishes to consider offering on the property.

The Real Estate Transfer Disclosure Statement is Your Friend

Sellers should also take full advantage of the Real Estate Transfer Disclosure Statement (RETDS) and RETDS Supplement to offer more details. When I give my Sellers these elaborate questionnaires, I tell them that this is their opportunity to avoid buyer’s remorse and reveal everything about the property that they might get sued for later. That usually scares them into remembering all the dirty details, like the porch they replaced without permits and the cat their kids used to have (cat pee is a ubiquitous source of litigation).

Multiple Offers– Multiple Disclosure Packets

When a property is hot and the Seller anticipates multiple offers, agents will try to get a sense of how competitive the bidding might get by asking how many disclosure packets are out. Lately, though, the number of packets out doesn’t always indicate the number of offers expected. Earlier this year, my clients bid on a property that had seven disclosure packages out. They went in at asking and because they were the only offer, got the property.

What to Look for in Disclosures

When I look at a disclosure packet, I speed read it the first time through. The major items of interest to me are the termite report (also known as a Structural Pest Control Report), the Contractor’s report (if available) and the Seller’s RETDS and Supplement. If it’s a condo, I also zero in on minutes from the HOA meetings, which often reveal the dark underbelly of life in the complex, like the crazy lady who creates disturbances in the lobby or neighborhood criminal activity.

This entry was posted on Sunday, February 4th, 2007 at 12:00 pm and is filed under Buying Strategies. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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