Do looming mysteries haunt your home sale? With proper investigation, you can unmask those sneaky hazards — which might not look so monstrous after all.
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t some point, whether you’re buying or selling a home, you’ll be confronted by an intimidating stack of statements, chock full of reported dangers to the property, its value, its residents, or (horrors!) even the chances of a stressfree sale. It’s perfectly reasonable to want to run away screaming — but these disclosure reports are actually your allies, helping shine a bright light on potential hazards. With a more complete understanding of the condition, value, and desirability of the property, you can protect yourself and sleep soundly. Luckily, it doesn’t take much sleuthing to get your fears under control. There’s a system in place to help buyers and sellers uncover the facts of the case (a mystery machine, if you will), and we’re your intrepid friends on this journey of discovery. So sit back, grab a Scooby snack, and let’s get on the case!
Sellers Don’t Booby-Trap Your Property When selling property, it’s in your best interest to
complete all required disclosures early and thoroughly. Conscientious disclosure doesn’t just do right by the buyer (and the law), but helps protect the sale from surprises, and may even save your own skin from a very scary lawsuit. In California, once a property enters escrow, the seller is responsible for providing the buyer with certain set of information, which your REALTOR® will help you get in order. For our purposes today, we’re focusing on the big two — the transfer disclosure statement (TDS) and the natural hazard disclosure (NHD) — important because they can give a potential buyer the right to walk away with their deposit. Share Your Clues The TDS is your opportunity to lay everything on the table that you know materially affects the property value — in other words, major things, and not simple wear-and-tear or opinions about your S.O.’s ghastly wallpaper choice. Again, your listing agent can help you make sure this is completed properly and in a timely fashion.
Before even beginning your home search, talk with your REALTOR® about your risk tolerance, and what sort of homeowner challenges you want to avoid or embrace. Don’t Blaze Me, Bro
Include any disclosures you received during purchase, and anything else that’s important, to the best of your knowledge. Don’t speculate needlessly on things that simply might be wrong; the disclosure is a place for facts. But if you’ve had inspections done and discovered the need for major work that wasn’t completed, do include that information — that’s no longer a hunch, but a matter of record. As the seller, you’re solely responsible for the quality of information you provide on the TDS, and liable for any omissions. However, your agent must also perform a visual inspection and note anything that you may have missed, so they have a vested interest in helping you be as thorough and true as possible. Don’t Hazard a Guess The second report is a far simpler matter. Order a new NHD statement for the most up-to-date information about your specific property’s risks from the six required types of natural hazard. This is another situation where you don’t want to guess — the company who prepares the report certifies the data. It’s well worth the price (usually between $100–200) to take the liability off your shoulders. Your agent can recommend some NHD providers, but as the seller you’re responsible for deciding which to use; don’t be afraid to shop around, but do your homework to make sure you’re choosing a reliable provider. Talk with your REALTOR® about any other required disclosures, which they’ll help you understand and arrange. Once these are all handed off, the contracted buyer will have a set amount of time to perform their own due diligence. Stand by and keep your phone handy; your agent will be keeping the line of communication open in case any items arise that require discussion or negotiation.
Buyers How Haunted Can You Handle? Every home comes with a certain amount of risk and unknowns. Buyers should take an active interest in understanding how any disclosures may influence both the market value and the value in a very personal sense. In most cases, the impacts are very low, but careful review of the disclosures can help the buyer decide which items are acceptable, require negotiation, or are total game-changers.
A very risk-averse buyer can use the natural hazards disclosure statement to rule out properties that are more prone to wildland fire and/or other types of disaster (and potential related insurance hikes or lender reluctance). But you don’t have to wait until escrow opens to learn about the likelihood of risk — in fact, you should incorporate this information into your home search parameters. With publicly available tools, you can choose or rule out whole neighborhoods or regions. For a general overview, start with Ready San Diego’s interactive hazards map, and of course, ask your agent to help you understand the implications and strategies for living in hazard zones. readysandiego.org/know-your-hazards Corroborate the Evidence Trust but verify, right? If you’re going to be living in this place for some time to come, you deserve to know its secrets before taking the key. Now that you’re in escrow, order your own inspections right away. When the disclosure statements are provided, discuss everything thoroughly with your REALTOR®, who can help you understand the implications of each entry, including its potential to affect the home’s value, lender requirements, insurance costs, or even your own personal enjoyment of the property. If what you find in the disclosures seems like too much to handle, now’s a good time to think about letting it go and continuing your search. But when you decide to go forward, these disclosures may prompt you to order additional inspections. The TDS and a visual inspection, together with any lender requirements, will help you decide which to order. Always get inspections done quickly; if anything appears that’s not covered in the TDS, your agent will again be there to help you determine what’s next. Happily Ever After It’s probably too much to hope that you’ve learned to enjoy escrow and disclosures, but we can hope this overview has helped dispel some home-sale fears. All homes have quirks or mysteries, but buying or selling is a fun adventure once you’ve unmasked the monsters. Happy hunting!
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