We are frequently asked by buyers and sellers – and even more often by brokers – what tips or strategies we have for buyers and sellers in a residential real estate transaction, based on the issues we see leading to lawsuits over purchase and sale deals. Here’s a summary of some of the most important tips and strategies we’ve put together through the years.
The Buyer’s Hot 15:
- Get yourself a knowledgeable, honest, and aggressive real estate agent.
- Pay attention to details when looking for a property – not only the property’s own physical attributes, but the neighborhood as well. This includes the roads, any adjacent or nearby grades/slopes, neighboring trees and landscaping, obvious or potential easements, etc.
- Do roof, home, and pest inspections with qualified inspectors who will generate a thorough, well-written report. Sit down with your real estate agent and go through these inspection reports item by item and page by page. Obtain any other inspections as needed.
- Be careful buying property “as is.” Read all seller disclosures carefully, along with any inspection reports the seller provides.
- Never waive inspection rights. That may come back to haunt you.
- Read and review all disclosures with your real estate agent. Ask questions for clarification, get answers to same in writing, note any red flags, and follow up until you are comfortable with each and every disclosure.
- Interview the neighbors. You’d be surprised at the wealth of information neighbors can provide on a property – often, they know of issues the sellers didn’t disclose.
- Read and understand the Earthquake and Environmental Handbooks. They are important sources of information and can have important implications for insurance.
- Pre-approve the loan amount that you need to purchase the house you want to buy. Don’t waste time with lenders who will not pre-approve you and that you have not already established a relationship with.
- Make sure you understand the Preliminary Title Reports and the easements affecting the property. If you do not, discuss it with the title company or your agent, or both.
- Be careful of advertisements and brochures that make a property seem too good to be true.
- If it appears too good to be true, it probably is not true. You or your agent should investigate.
- Do not purchase a property with a relative bid. It is a dangerous practice and it may be invalid.
- Make sure your agent, or someone else, pulls the building permits for the property and explains them to you.
- Make sure your agent does everything possible to present your offer in the best light directly to the seller and the seller’s agent.
The Seller’s Top Ten:
- Get yourself a knowledgeable, honest and aggressive real estate agent. What you may save on a commission you can easily lose ten times over in a lower final contract price; as they say, when you pay peanuts, you get monkeys.
- Make sure your agent lists the property on the Multiple Listing Service.
- Do not accept a pocket non-multiple listing for any period.
- If there are multiple offers on your property, understand how they are going to be presented, meet with the various buyer’s agents, but don’t be overly impressed with the emotional appeal. Make sure the buyer you choose is the most qualified for your property in your area because the other buyers who make offers that are not accepted will probably find other homes.
- Disclose everything about the property clearly and unequivocally. What you hide from the buyers, or what you forget to tell the buyer, will be disclosed to them at the first neighborhood get-together. Your old neighbors will become the new neighbors of your buyer and their friends. Most lawsuits regarding the defective condition of a property start with the neighbor telling the new buyer what you forgot or failed to disclose.
- Hire inspectors before the property is listed so you know its condition inside and out. Find out whether there are termite problems, dry rot, roof issues, etc., so there will be no surprises when you set your selling price.
- Don’t give buyers possession of your property before close of escrow unless you have been fully and adequately informed of the risks.
- Don’t try to cheat your real estate agent out of a commission – it will only come back to haunt you. Commissiondectomies don’t work. They may be unenforceable.
- Don’t sell the house ”as is” without the buyer having the right to obtain an independent property inspection. The house may be sold, but you will likely be surprised with a lawsuit after the close of escrow if there are any errors or omissions in your disclosures.
- Make sure you understand the paperwork, the contract, the listing, and all of the related disclosure documents. Do not complete your disclosure documents in one sitting; take several days, or even weeks, to fully and adequately recall and document your experiences and knowledge of the property.