Buy smart when real estate lacks disclosures

February 17th, 2011 9:36am
REThink Real Estate

Tara-Nicholle Nelson
Inman News™

Q: Do you need a property disclosure filled out if the listing is in an estate? --Leanna

A: Whether an estate that is selling a home needs to complete a property disclosure depends on the laws of that state. Unbeknownst to many, a number of states exempt corporate and institutional sellers from having to make disclosures to the property's buyer regarding its condition.

As a result, we're increasingly seeing situations in which buyers have to fend for themselves when it comes to collecting information about the condition of a property they are considering buying.

This is due to the increasing proportion of home sellers that are comprised of banks selling foreclosed homes, estates, investment companies that rehab and resell foreclosures, and even relocation companies that own the homes of employees who were unable to sell them on their own before an employer-required move.

To determine whether a disclosure is required in your area, talk with a local real estate broker or attorney.

A word of caution, though. Even if a disclosure form is required to be completed by an estate seller (the heirs or executors selling a home that once belonged to the home's now-deceased former owner), many smart sellers in this situation will simply complete the form with some sort of verbiage to the effect that they have no knowledge of any material (read: important) information about the property, and that they are advising the home's buyer to obtain thorough inspections.

This is very common among banks selling foreclosures as well; they will complete the disclosure form, but it will be devoid of any useful information.

Now, some estates are better positioned than others to make substantive disclosures about the condition of a property, as when the executor of the estate did actually live in the property, or was a close relative of the decedent (the former owner) and knows something -- or everything -- about the place. It is in these situations where the law of your state will be critical.

Some states require all sellers to disclose any information they do have; however, it would be extremely tough to prove, if it later came to it, what information an estate seller did or did not possess about a property.

So, be advised -- your best bet, if you are buying a property being sold by an estate, is to avoid relying on disclosures, and simply have the property inspected as thoroughly as possible before you buy.

Check in with your broker about all the inspections that are available to you, and empower them to help you make the best decisions about which inspections to get by getting as clear as you can in your own head about what elements of your new home are the most important to you.

If you know that you will be needing to work at home and install extensive computer equipment, it might make sense to have an electrician come inspect and brief you on the status of the property's electrical system and what it will cost, if anything, to bring it up to your standards.

If quiet is a huge issue for you, you might want to visit the property at various times of day and various days of the week to see what the noise levels are on more than an isolated occasion or two.

If your property inspector recommends that you have the roof and the foundation looked at by specialists -- do not blow those recommendations off!

When you buy a home from a seller who has lived in the property, you often have the benefit of their knowledge of the home's glitches and defects, which you can use to collect repair bids and direct your inspection dollars.

It's always critical to be diligent and comprehensive when you obtain home inspections, but the ante is definitely upped when you buy a home without the advantage of condition disclosures from a knowledgeable, honest seller.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   
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