We just closed a transaction with a client in Anderson who bought the most wonderful ranch house. During the offer period, it was noted in the disclosures that the house had a disclosed sewer backup in 2014 and that they have not had issue since. I also noticed that they had a mature, 25 year+ Silver maple in the front yard. I informed my client that it was my opinion that we inspect the sewer in addition to the house, which she was receptive too because she just replaced a sewer in her current house in Clifton. The buyer hired Zins Plumbing, a local Cincinnati company to camera the drain. They discovered a major root intrusion and major break in the sewer line. Zins Plumbing was very professional and marked the location in the front yard and recommended that Metropolitan Sewer District (MSD) to be called and they would see if the blockage went into their sewer main. It is the homeowners responsibility to keep the house sewer to the street clear of roots. This is mentioned in multiple documents found on the public service website- http://www.msdgc.org MSD only becomes involved when the pipe is compromised, cracked or shifted from alignment, within the Right of Way (ROW). In our case, the pipe damage was deemed within the ROW and its depth was over 15’ below the surface. The estimate to perform this repair was well over $10k. The cost of inspection was $200, the cost saved was peace of mind and over $9800. That’s a nice return on investment and something that in my opinion more Buyers and Sellers should investigate as they do maintenance on our homes. Knowledge is Power, and as always be careful out there buying and selling real estate!
The most major contingency in the Real Estate transaction is the inspection period. It is typically a 10-15 day period from which you can hire a home inspector to provide you a report of their opinion of condition. In the report, they will provide opinions of defects and they can recommend further investigation and/ or they state that a repair should be completed. The inspector does not include in the report how to correct, they do not recommend companies to do the repair. Your agent may have qualified persons from previous dealings or AngiesList is always an option. The Buyer takes the information in the report and tells the agent what items within the report need to be repaired or resolved before they move forward with the purchase. The Buyers agent provides this list of desired repairs to the Sellers agent on a “Post Inspection Addendum” boilerplate form. After the presentation of this form the Sellers have a negotiated time period to respond to the addendum. We usually write 3-5 days in the purchase contract. The Sellers can negotiate from the Addendum. While it is a request of repair, it is formally a counter offer to the original purchase contract. As a buyer, you should understand that they can say “NO” to any item. Typically, if the request is reasonable, we get this negotiated pretty easily unless a structural or major mechanical system needs addressed. Sellers are hesitant to invest money in the house that they want to Sell, and Buyers are wanting a stable house to move into. It is critical that both agents understand their clients goals; Buyers Agent- Buyer needs a house; Sellers Agent- navigate the Owner to a successful Closing. After everyone is satisfied, the Buyer and Seller sign the addendum and move forward to Closing! If the Buyer and Seller can not be satisfied, then the Buyer is Released from the Contract and retains the Earnest Money deposit because they exited the contract using a negotiated contingency. In the Sellers market that Cincinnati saw the summers of 2014 and 2015, I saw many contracts being emotionally written and then the buyers agents’ used the inspection period to negotiate the transaction to the real market price. It was a tactic used to emotionally invest the Buyer and Seller, then you leverage the fear of the Sellers that the house would look defective if they couldn’t negotiate with the Buyers. It is something to be aware of during the transaction!
(photo credit- The Enquirer/ Leigh Taylor) I got an unexpected call the other day (mid-September): Caller: “Is this John? I am calling to thank you for writing a blog post about my house, the article is named “Shame on you Sibcy Cline…”.” Me: “Thank you, how can I help you?” Caller: “I appreciate your effort to tell my side of the story and here are some additional facts that you were not aware of…” New facts from the caller were discussed and are all best captured in this Cincinnati Enquirer article by Bowdeya Tweh. http://www.cincinnati.com/story/money/2014/09/27/can-next-door-neighbor-home-sale-deal-buster/16366359/ Notable topics that I pulled from the article are: “Pleatman and her pediatrician husband waived a home inspection and signed a contract on Sept. 26, 2013, to buy the Pipewell Lane house from Grant Troja.” This fact that they waived a home inspection is shocking. The article does not go into the details, but even if a Seller provides a home inspection report from a prior Buyer or that was contracted by the Seller, I always recommend that my clients perform a home inspection. A home inspection does not need to involve a home inspector- it can be from a specific trades contractor, an architect, friends with critical eyes, or a mixture of the above. The inspection period is the best period of time to walk or RUN from a contract. It happens all the time and it is an industry norm. Waiving an inspection on a 6533 sqft home (above ground) that was built 42 years ago is not a good idea! “The seller calls the shot on their listing,” Garland said. This idea is very true and in my opinion the proof of a good agent. I ask myself during the hard times in the transaction “Is this for my client, or for me?”. Another side of this is that the agent has the choice to work with a client who is telling them to not disclose a fact that a convicted murder lives next door. As an independent contractor working with Keller Williams Realty, I make my own decisions and personally, as a father of 2, could go along with the non-disclosure of this fact- if known. I would not have taken the Listing. This decision is difficult because a Listing of that price is a payday of approx. $37,500!! The value of a GREAT agent: I was just in Austin Texas for an event called ‘MegaCamp’, which Keller Williams produces. One of the most active listening topics was the replacement of agents with the internet and online brokerages. It is my opinion that cases like this exhibit the value added by competent agents working with a good Brokerage. Whether it is a $1.3M property or a $100k property, the Buyers/ Sellers/ Agents responsibility is equal- how are your local professionals carrying that responsibility? Edit from my Blog post called- “Shame on you Sibcy Cline”, not Really- I mentioned this and the website is inaccurate- do not trust this information. I have not found an accurate source as of yet. “This site allows you to search the felonies in your area. http://www.felonspy.com/search.html”
This story has opened up some great conversations among friends, neighbors, clients and other agents. I have dug in more, but this time, into the facts of disclosures and how to get information. The information is important, but more than that, its critical to understand how to use it and what boundaries you may have. Per the Cincinnati Board of Realtors website, they have posted information about handling disclosures of convicted sexual predators and convicted felons. Here is a brief paragraph that has much of the pertinent information. History and details- “Ohio’s Sex Offender Registration and Notification Law, HB 180, was adopted in 1996 with an effective date of July 1, 1997 for the registration and community notification provisions. Ohio’s Megan’s Law was amended by Senate Bill 175, which became effective on May 7, 2002″ “HB 180 does not address a property owner’s or real estate licensee’s duty to disclose to a tenant or buyer that a known sex offender lives in the neighborhood. It is impossible to say with certainty how a court would rule on this disclosure issue as some decisions state that information of public record does not have to be disclosed and other decisions indicate that this could be found to be material information that should have been disclosed. Due to this uncertainty, if the property owner has been notified by the sheriff, the cautious approach would be to disclose this information to the buyer or tenant. Of course this issue and the brokerage disclosure policy must be discussed with the property owner and consented to. If the property owner does not consent, the broker must decide whether to comply with the owner’s request not to disclose or decline to sell/rent the property due to the possible risk involved.” My Opinion- What I am reading is that no one knows what is the right thing to do… It is upto the memory of the Seller during the Listing appointment to mention to me that they have a neighbor with a ‘history’. The other time could come later, but if the Seller got the letter from the Sheriff 15 years ago, once, they would not have that on the top of their mind. The system has a flaw and I believe the State of Ohio does not know the correct answer. The idea that a client could divulge information and then say “don’t tell anyone” is a real concept, as I have had clients tell me things. It has never been about this topic, but its usually something mild and it doesnt require disclosure. Educating the client is without doubt the strongest position for the agent. While managing the potential of a client saying they don’t want something disclosed, the right decision for the agent is to inquire with his/her broker as to the correct way to handle that specific situation. Further, I would make this conversation with the Broker an email, to create a paper trail. I have created liability by having too much information on this topic based on one of the paragraphs- “It’s important for Realtors® to understand that prospective buyers are the ones who should be doing the offender research, should they desire. If the Realtor® gets involved, it could result in potential liability problems, as with any disclosure issues relating to the property.” My Opinion- If the event happens and it is of knowledge to me, I would likely deliver the information regarding a particular person. I do not want to play judge or jury on other peoples lives as what is a ‘big deal’ to me, isn’t necessarily a ‘big deal’ to someone else. However, I am not going to seek this information as I just don’t have the time to investigate. I will however, build a page on the website dedicated to inspections as I think you should ask all of the questions in life that you want/ deserve an answer!