Disclose or Dissemble?

My recent almost first time buyer identity was shattered by a disturbing disclosure. Or rather, by a failure to to disclose the disclosures. A Realtor, who shall remain nameless (and is in Portland, OR, anyway), had us almost in contract before I ever lay eyes on the disclosures, at which time I discovered

1. Lead paint

2. Mold in basement

3. Leak in basement (only in “heavy rains.” Mind you, this home is in Portland, OR. Heavy rain is as expected as death and taxes. Let’s call it a leak then, yes?)

4. Electrical panel had been recalled. “Some” repairs were made.

5. “Slight” leak in upstairs bath.

6. Entire basement, including a bath, constructed without permits.

7. Warp in foundation, assured to be a “non-issue” since seller had been told this 10 years ago when he bought the home.

8. No evidence available the oil tank had been decomissioned.

Upshot? We were advised to not only have the home inspected ($350), but to have a structural engineer look at the foundation ($350), have the soil tested for evidence of oil tank ($50-$225), hire an expert electrician to examine the re-done electrical ($200 or more), and to ignore the lead paint as it’s part of old houses, or to plan to strip down hundreds of years of paint layers to get it out. Further, we were told that the mold and leaks were not really problems and that the inspector who’d noted them was incompetent, and that his report contained many “grammar and spelling errors”; thus, his opinion mattered nil.

Well! I’m a first time buyer, maybe I mentioned. I’m shy and timid around things like mold, even if they are spelled mollllld. And I don’t feel like spending over a $1000 to inspect a house I might not even buy.

Is this normal? Is it part of due dilligence to basically inspect and reinspect every inch of the home to discover what really is a “small” non-issue and what is going to cost me my retirement savings to repair? I remember looking at homes in SF wherein the disclosures were sitting on the counter, next to all the Realtor business cards. Is it par for the course that these essential documents might not turn up until the potential buyer is one minute away from signing her earnest money away?

You all are the experts here. Comments welcome, as long as they don’t come with the $350 price-tag.

 

Drawing: i.ehow

17 thoughts on “Disclose or Dissemble?

  1. Over in the East Bay, we always advise buyers to budget about $1000 on inspections for homes they are serious about. Should they reveal problems they can’t deal with, then the $1000 was well spent. (One time when a deal fell apart on a technicality, we even got the inspection fees reimbursed for the client!)

    Coincidentally, we just worked with a client from Portland who was also an agent. They were a bit surprised by the sheer volume of disclosures we provide here.

  2. ON the topic – if a house on the market has no contractor’s inspection report available, and I order and pay for one, am i cheap to not share it with the selling agent if I pass on the property?

  3. Hi Anna Marie,

    I happened to come across your post. I sell real estate in Southern California, and I understand that some of the tradition in NoCal are a bit different than here i.e. disclosures usually aren’t disclosed until the Buyer has an accepted offer. Most of the items that you mentioned in the post are common discoveries that are found during an inspection of a home. That is not to say that they are not serious, as you should thoroughly investigate in order to satisfy and alleviate your discomforts. Any water intrusion into a home is an issue that should be addressed! Any safety issue (electrical panel) should be addressed, as it could prove to be a fire hazard. As Henry stated above, $1000 is good start to budgeting an inspection, although I just had a client spend $7000 on inspections, and then back out of the house. It is much better to have peace of mind up front, rather than wish in hindsight you had looked into into earlier. Geological and Structural inspections can be PRICEY but very revealing. W

    Please keep in mind that it is Your job, as the buyer, to inspect the property with competent inspectors and to make sure that you feel comfortable to move forward with the transaction. An agent is not a mind reader, or a trained inspector, and may not be familiar with building codes, however, anything that is a material fact, and known to the agent, should be disclosed.

    Older homes are almost always going to have some issues.

    One thing that you failed to mention was whether you feel you got a substantially “good” deal on the home! It may be possibly to reduce the purchase price or receive a credit back, depending on the terms of the contract. Hopefully, you got a great house, with issues that can be taken care of, that will bring you years of happy memories.

    I know that this is long winded, and short winded, in many regards. I hope it gives you some insight. :)

  4. Actually, you are, in a way, doing them a favor. If they are not in possession of the inspection, it can’t be disclosed. Although, the listing agent should reveal to any new buyer the name of the inspector and contact information if they have them.

  5. B Jack. I so disagree.
    My take on CURRENT market is that the agent has a moral obligation to do his best to sell as fast and as clean and as high as he can – on the behalf of his client = the seller.

    Market is slow. Pockets are overflowing with cash.
    Not advertising a property in a full disclosure way is – IMO – the ultimate professional mistake that can be done in this market.

    buyers are less dumb than most selling agents want to believe, and buyers will have no problem refusing to buy if the deal is not pristine. Buyers KNOW the market. Buyers KNOW to use internet, to use all info available, including zillow and other debatable sources.
    The selling agent preparing a clean packet of all information available annonces only one aspect: open for business and nothing to hide.

    And vice versa, the absence of disclosure packet on the kitchen counter during open house means in THIS market in THIS city that there are skeletons in the closets – skeletons too big and too scary … so buyers, just move on to next house or wait for said property to stale to aggressively make a very low offer.

    my list of MUST HAVE in the disclosure, or it’s a “next please”:
    lot info from city assessor – sqft – legality of main items (major extension, in law etc) – dimensions of garage (length, width and height) – contractor inspection (paid with money saved from stopping advertisement on shopping carts ;) ).

    would be awesome to have:
    level, schedule and orientation of noise (and noise control if any).
    wind – fog description. there are BOTH in ALL the lots in the city.
    official slope of the street block (as a whole)
    energy efficiency of the unit (blow test is a bare minimum)
    required in other countries:
    all utility bills for the past 24 months (elec, gas, water etc)
    lead paint (the whole building) – lead in water/lead pipes (or whatever water supply information is appropriate for the city) – asbestos of the whole building and adjacent buildings if row house.

    I must miss a few.

    the whole point is that a property advertised as “1.4M includes an 80.000 allowance – see disclosure” has 200 times more chances to sell at asking price as the same property at 1.5M – and then, the buyer discounts himself a large 200.000 for found – and not found yet – repairs. … if the buyer closes at all.

    Anyway. disclosure should not be “a nice gesture” and if RE agents are not able to self discipline themselves, they’ll just get slapped in the face with laws making them disclose anyway.

    ((now, not putting all of it on the property website is one thing. I’m talking about not giving WILLINGLY AND HAPPILY AND HONESTLY any information when an buying agent calls to announce an offer is coming))

  6. Hi Anna Marie. I am a broker here in Portland and I am sorry you hado a bad experience in purchasing a home here. The seller and the agents need to disclose everything they are aware of. It behooves you as a buyer to check out everything. If you don’t during the inspection period, you will have no recourse later on – or very little. It costs a lot of money to check everything out but we here in Oregon (and yes I am a licensed broker in Portland for 34 years), are required to disclose and recommend inspections. It is up to you the buyer whether you want to proceed with those inspections. However, we are required to disclose and inform you of everything we know or the seller knows. I am shocked to hear they did not suggest continue with the lead base paint inspection as that is a major issue here and we are required by law to inform you of those issues. I write about disclosures a lot at my blog and have upcoming posts as well as disclosure is an important aspect of selling real estate. (ALL ABOUT…..Portland.Oregon.Real Estate @http://bettyjung.wordpress.com). All the best and I hope your next experience is a good one for you.

  7. Anna Marie, slightly off topic, but what are you doing buying in Portland over SF? Are you leaving us? We will miss your witty real estate commentary here…

  8. If it makes you feel any better I have shelled out ~$1000 for inspections on three different occasions (one of whch was just heartbreaking but that’s a long story), but the third time was the charm and led to the home I now own (as of last week – woot!). It’s annoying but if you are serious about a property you have to do it. You shouldn’t be doing it until you have the disclosures though so you know what to keep aneye out for. Sounds like that was the case here so I’m not sure what the issue is. Was the realtor hiding the disclosure from you? I wouldn’t even discuss price or offers until I saw the disclosures.
    The home I have has a recalled electrical box and I have a feeling that leak issues are going to be common in a town like Portland particurarly in older homes. On the other hand the home prices are what we call deposits down here. :)

  9. Anna Marie, this is worth a “comment of the day”:

    “(as of last week – woot!)”

    CONGRATS missionite. Honeymoon? Have you moved in already?

  10. CONGRATS! you have been looking as long as i! hope you will be giving all the details of your win (submedian!)… but that you made it at all is very inspiring to me.

    and thanks to everyone for the comments and inight.

  11. Most buyers are not qualified to purchase a home with or without disclosures. You need a skilled buyers agent and you need the best inspectors. A good agent will already have a personal relationship with a good inspector.

    Personally, I find ill prepared sellers and seller agents ripe for bottom feeding since it is generally a sign of a weak realtor that is not concerned about the sellers interest. Face it, they are out there. And there are too many “Sophies” out there that will only deal with those pristine situation and aren’t willing to do the hard work for their clients to determine if perhaps a home is a good deal in spite of some issues.

    A good friend just got an amazing deal on a condo that was sitting on the market for over 200 days with an older agent who refused to provide disclosures to anyone unless they drove to her office outside of the city; and made every step of the process extremely painful. Buyers agent did all the extra work and managed a nice process with an extremely difficult selling agent. No wonder it was on the market for 200+ days. The end result was a 1500 sqft NobHill condo in pristine condition at far below market comps.

    Good luck!

  12. hey, missionite- if you want to write up the story of you success for the frontsteps, i’m guest editing while alex is away and i know he would love your story– as would all us wannabe buyers.

  13. Run, not walk, away from this deal as fas as you can. Whether it’s in Portland, Seattle, Walnut Creek, CA (my town). There are more red flags than the entire Stanford cheerleading squad. Unless you like litigation, forget about this dump.

  14. I don’t want to hijack the thread, but since you ask I posted our story over at submedian.blogspot.com. You are welcome to cross post it here (assuming Alex is ok with that), as TFS has certainly been a big part of our home purchase experience.

  15. missionite,

    I looked at the blog, and you (maybe on purpose) don’t say the ‘hood. I would be interested in knowing if you want to tell.

  16. I will cross post it- tomorrow if that’s cool. Alex won’t mind… anyway he put me in charge and I think buyers want to know this stuff. I haven’t heard a succcess story from someone if more moderate means in a long time, and that’s most of us in this city, so YAY for you and YAY for us.

    THANKS!

  17. A negative inspection report should be passed on to the sellers agent for two reasons: 1. Ethically, future potential buyers should know about it and once you pass it on it becomes part of the disclosure package, 2. A negative inspection report in a weak market is a great way to negotiate a better price if you are willing to tackle the problems.

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