The Most Important Thing When Buying a Home is Opportunity
Are homebuyers missing the bigger picture when searching for a home, like the opportunity to own one?
On a weekly basis, I’m contacted by buyer’s agents regarding the purchase of a home I have listed for sale. It is not uncommon for them to send me a list of questions their buyers have about the home via email that numbers in the ’20s or ’30s. If the property is hot (has a lot of activity) it may be under contract before the seller answers the questions. It may have been better for the buyer to have submitted an agreement to purchase the property and ask questions later.
Don’t get me wrong, It is understandable that a buyer has questions about a property they are interested in purchasing. The real question is why they don’t grasp the right to purchase the home first and ask questions within the guidelines of the agreement later.
To better explain my position it is important to understand how most agreements to purchase real estate work.
Many times an agreement has conditions such as home inspection contingencies, mortgage contingencies, etc. This makes the agreement more indicative of a purchase option. If a buyer is not satisfied with the home inspection report they can void the agreement and their earnest money, if any, is returned to them. If they are pleased with the results and clear all other conditions they purchase the home. This can only happen if they were under contract with the seller in the first place.
Before signing an Agreement the buyer is presented with a Seller Property Disclosure Statement. The SPD, as we call it, is part of The Real Estate Seller Disclosure Law (68 P.S. §7301 et seq.) which requires that a seller of a property must disclose to a buyer all known material defects about the property being sold that are not readily observable. It is 9 pages of pure seller disclosure torture. (Visit my website to read more about this law). The first question the SPD asks the seller is as follows: “Does Seller possess expertise in contracting, engineering, architecture, environmental assessment or other areas related to the construction and conditions of the property and its improvements?” Almost everyone who has filled out this form chooses “NO”. Subsequently, one of the last question the SPD asks is “Are you (the seller) aware of any material defects to the property, dwelling, or fixtures which are not disclosed elsewhere on this form?” Sounds like the SPD covers everything, especially given the end question. That would be nice but unfortunately, it is impossible for anyone document to do this. Every piece of real estate is unique unto itself and therefore may raise questions never before conceived.
I advise buyers I represent to ask any questions they may have as part of the inspection reply. The buyer has the right to be at the home inspection. Many of their initial questions may be answered by the home inspector(s) at that time. It could also invite other questions as well. In many cases, I would rather have the trained home inspector answer the buyer’s questions than the seller who answered “NO” to the first question on the SPD. By asking the seller additional questions as part of the inspection reply I am not only assured that they will be officially addressed but also attached and made part of the agreement.
Sellers should be mindful of how they answer emailed questions outside an agreement of sale. Even though they are not part of the agreement they are, nonetheless, on the record. Not even the SPD is attached or part of the agreement yet it is used time and again in courts of law. Remember, material defects disclosure is considered a state law in Pennsylvania as part of the Residential Real Estate Transfers Law which encompasses both the Real Estate Seller Disclosure Law and the Home Inspection Law. Under the Disclosure Law, there is no need to prove fraud but merely that the seller did not provide adequate disclosure as required.
The moral of this tale is that buyers should concentrate on securing the option to purchase the home of their dreams. Sellers should pay special attention to the SPD and disclose anything and everything they know about their home. There is no defense for a seller who maliciously hides a material defect from a prospective buyer and there is no victory for a buyer who loses their dream home worrying about it.
Knowledge is power!
Jeffrey C. Hogue