In Hot Real Estate Markets, Sellers Can Get Burned
And you thought, “What does my neighbor have that is so special?” Indeed. They didn’t seem to care for yard work (well, at least until several weeks ago). Did you ever see them pick up a hammer? Or a saw? A glass of lemonade or barbecue tongs seemed to be all that fit into their hands.
Now what apparently fits into their hands is a hefty offer from multiple buyers, bidding on their house as if it were a cherished antique at Sotheby’s.
“What could I get for my home?,” you wonder. It would be nice, after all, to move into something larger, newer – better. And your neighbors didn’t seem to do much: Stick a sign in the yard, have an open house or two, and presto — instant wealth for a house that, in the real estate lingo, “needs some TLC”.
But don’t be fooled by appearances. While the real estate market is hot, sellers can still get burned.
Whether you sell your home on your own, or choose to sell it yourself, you still need to disclose any defects to potential buyers. That single requirement can give sellers a lot of headaches. “One of the biggest things in real estate is the disclosure issue,” says Oakland real estate attorney Bari Robinson. “This is probably one of the hottest areas of litigation in buying and selling homes.”
Robinson says that, sometimes, the seller, “does not disclose everything that is necessary.” While the standard seems clear — Robinson says it is “anything the seller knows or reasonably should have known,” — sellers may be tempted to cut corners, or simply overlook the obvious.
“Later on, a buyer may find problems which should have been disclosed by the seller or broker,” Robinson says, noting that a seller’s real estate agent can also be liable for defects not disclosed to the buyers.
Normally, then, a real estate agent can add some additional protection. But Julia Korpi, a real estate agent based in San Leandro, advises that all agents are not the same. “You want to be sure that the agent does not have you sign a liability disclaimer,” she says. While not widespread, the disclaimers are occasionally proffered by agents who want the commission without the risk, leaving the seller to bear full responsibility for disclosure issues.
In fact, Korpi says helping a seller deal with disclosures is one of the key advantages in using a realtor. “In our office, we conduct a full investigation of each property, so disclosures can be made to all parties concerned,” she explains.
A real estate agent for over 25 years, Korpi is quick to point out that many sellers aren’t intentionally deceptive, either. “A lot of the time, owners don’t realize something could be a disclosure issue. They’ve just lived in the house so long, they just overlook the problem,” she explains.
While disclosures may seem the most daunting of a seller’s challenges, it is not the only one. Korpi says that sellers sometimes make mistakes in other areas that can cost them money, too.
“Sometimes, a seller will approach an agent with a market price in mind. Sellers tend to overprice, and a home more reasonably priced often gets more money in the end,” she notes.
Likewise, Korpi makes sure that she handles the open house and ensuing offers in the best possible way. “Sometimes, a seller wants to hold his own open house. But, you have no idea who is coming through the door. In this market, you could have as many as 40 people in your house at one time. If a seller handles the open house themselves, they don’t have the ability to find out who in that group is a serious buyer, and what questions to ask to find out.”
Before finding an agent, Korpi says sellers also want to do quite a bit of remodeling — yet another way money is often wasted. “Actually, there’s only a few things that will really increase the price of the home,” she says, adding that she will let sellers know what is in their best interest to fix, and what is better left to the buyer.
That is echoed by the California Association of Realtors (CAR). Their web site, www. car.org, provides an entire section of information solely for home sellers. Cautioning against excessive home remodeling, the web site also discusses the advantages of using a Realtor, and provides other home selling advice.
While you may think you’ll never hear from your agent once your home is sold, Korpi says that is not necessarily the case. “I follow up in the first two weeks after the sale,” she notes, and frequently stays in touch with buyers and sellers alike.
“That’s the whole name of the game in being a good agent – following up.”
