April 2010: Real Estate

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 Buyers know they hold the cards in the current lackluster housing market, but there’s one obstacle they might be wary of: misrepresentations by home sellers. 

Nationwide, there have been reports of eager sellers exaggerating square footage and acreage, minimizing property taxes or utility bills, conveniently forgetting about past problems with termites or insisting that charming propane stove in the living room really is capable of heating the entire house.

Local broker Michael Guthrie advises that buyers never, ever waive a home inspection—their only line of defense against undetected problems.

Former Charlottesville Area Association of Realtors (CAAR) President Michael Guthrie, CEO and principal broker at Roy Wheeler Realty Co., says that while he’s heard of such shenanigans, homebuyers in Virginia are actually less likely to become embroiled in costly real estate mistakes than in other parts of the country. 

For one thing, stiff competition means that “sellers are having to work that much harder to put their homes in much better condition to sell,” he says. “Buyers have the luxury of going back to a home three or four times—often with a home inspector—so any problems that exist are usually found. Deals fall apart if the buyer finds out the seller is being disingenuous or withholding information.”  

Secondly, Virginia’s disclosure laws place the onus of responsibility on the buyer, in what is known as caveat emptor (let the buyer beware). The seller signs a document disclaiming any warranties or representations as to the condition of the house—he or she agrees to sell it “as is.” The buyer is then free to perform his or her own due diligence by bringing in a home inspector, licensed engineer, land surveyor, geologist, insect expert, etc. 

While this may seem like more work and expense for the homebuyer, it also eliminates any gray area. Disclosure laws in more than 30 other states, on the other hand, require sellers to disclose any and all problems—but only those problems they have actual knowledge of. There very well may be issues the seller doesn’t know about, such as hidden mold or a long-ago insect problem, but this technicality may open the door to obfuscation. 

Another protection for Virginia buyers is that if a home is listed with an agent, that agent is required to disclose any problems. Guthrie advises that buyers never, ever waive a home inspection—their only line of defense.

Virginia sellers are also not required to divulge any structural changes—the addition of a bathroom, a new sunroom, etc.—not built to code unless they’ve already been cited in violation of local building laws by the city or county (if a county building inspector hasn’t already discovered that the new deck is held together by duct tape, it’s not up to the seller to share this information). 

Sellers also don’t have to reveal the existence of any historic district ordinances or resource protection areas—in other words, it’s not up to sellers to explain that adding on to a home in historic downtown or in the Chesapeake Bay watershed is not allowed. Nor do they have to alert buyers to the proximity of sexual offenders. 

The same laws apply to bank-owned homes transferred in foreclosures, which now account for a larger percentage of sales. 

Here are a few of the more common misrepresentations a buyer might hear when shopping for a home.

• “This is a really quiet neighborhood.” Noise pollution is subjective, so the only way to determine if it’s too loud is by spending enough time on or around a property at different times of the week—during the day, the weekend, weeknights—to get a sense of whether it’s too loud for you. 

• “We live on three acres.” Just because a fence line looks like it encloses three acres doesn’t mean the property actually is three acres. Request an updated plat or survey. 

• “What flooding?” Signs of past flooding in the basement are usually caught during the inspection, but sometimes they’re missed. Make a point of asking the listing agent directly. If he knows, he’s obligated to disclose the information in the state of Virginia. 

• “No bugs here!” A home inspection generally doesn’t cover insect damage. Hire a pest specialist to go over the home.

• “Taxes are low.” Ask to see recent tax bills, and check with the tax assessor’s office for updated information.—Jessie Knadler

 

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