Real Estate Investing

As my kids grew up, I always told them that if they had the “Uh-Oh” feeling when they thought about doing something bad or were in different situations, they should trust that instinct.  The same advice can be applied to real estate transactions - whether you’re the buyer, seller, agent, or lender.  If you stop to think, “Hmmm… maybe I should say something…” then you should disclose it.

Besides, NOT disclosing is the main reason for lawsuits, according to an article in the LA Times on October 4, 2009.

One-third of the respondents say disclosure issues are a “significant source” of their clients’ beefs, and nearly 45% believe the topic will become an even bigger issue over the next two years.

Water intrusion and the mold problems that often follow are a major issue. Disputes concerning structural defects are also extremely common. And issues concerning septic and sewer systems, misstatements about square footage and “as is” clauses also generate more than their fair share of legal problems.

I once sold a house and five months later received a phone call from the selling agent complaining that water was entering the garage.  Fortunately, the home inspector specifically noted that on the day of the inspection it was raining and there was no pooling and water entry into any part of the domicile.  We found later that the buyer had removed the water diversion pipes.

No matter what, I always advice my sellers to disclose, just as I disclose findings that come across my email, desk, ears, or eyes.  I want to be able to sleep at night!

There’s an agent in my area who shall remain nameless.  He’s a big, popular agent.  He guarantees his listings will sell in 60 days or else.  The else is the charming part… or else what?

Or else he’ll buy them personally?  No.

Or else he’ll sell them without charging a commission?  No.

Or else he’ll just re-list them again and again so it will appear it’s only been listed for 60 days?  Bingo!

A friend of mine - before I became an agent myself - once said that she called him and learned that to list with him you were required to sign at least six listing forms.  Each form was good for 30 to 60 days.  When one listing date expired, his staff would re-input everything into the MLS thus creating a new MLS number.  We’re not supposed to do this - it’s against the MLS rules… more specifically there’s supposed to be a 10-day rest period before a home listing shows back up as a new, active listing.  Here’s what I found the other day on one home:

August 6, 2007 - 49 days
September 24, 2007 - 49 days
November 12, 2007 - 46 days
December 28, 2007 - 61 days
February 28, 2008 - 46 days
April 14, 2008 - 46 days
May 30, 2008 - 63 days
August 1, 2008 - 45 days
September 15, 2008 - 45 days
October 30, 2008 - 48 days
December 17, 2008 - 170 days (wrong picture)
June 5, 2009 - 119 days

I definitely sense a pattern that the agent is tired of the 45 days listings and is expanding them to three and four months! So this may be a boost for sellers - to give them optimal exposure because we agents do keep an eye on the hot sheets - to see what’s new on the market, what prices have come down, who’s withdrawn and expired.  Yet it’s misleading to buyers UNLESS their agent performs due diligence and looks at the full history of the house.  If I was the buyer’s agent, my thoughts would be that since it’s been on the market for 787 DAYS, they may be willing to negotiate.  OR they probably are NOT willing to negotiate!

Maybe we should just call this Reason #29 to Interview and Hire a Professional Realtor to Represent Your Best Interests.

When I bought my first and second homes, I wanted to know what the square footage was.  Is it 1400 square feet or 2400?  Do you measure the outside of the house and add, or measure rooms and add them up to get the square footage?  According to an attorney who visited our office today, none of the above.

His advice to agents?  YOU should never measure a house yourself.  While it seems straightforward, figuring out the square footage of a dwelling can be tricky business.  There is no standard methodology for measuring - in fact three different appraisers, a professional measurer (is that a word?), an appraiser, and an agent could quite possibly ALL come up with a different number.

His next bit of advice?   If you publish the square footage of a home, always attribute where you got the number.  If it’s from the tax records, say that’s where you found it.  Additionally, agents would be wise to state in the MLS listing, “Information here not warranted or guaranteed” and add, “If square footage is important to you, you need to measure it yourself.”

Interestingly, in Texas - and perhaps other states - state law prohibits real estate agents from revealing the square footage according to the attorney today.  While I was unable to find evidence of that via my friend Google, I did see that square footage has not been listed for years in California.

Here’s an interesting discussion about the subject with points of views from many states.

Photo by Aussie Gall via Flickr Creative Commons.