Any buyer who goes to an open house can see a big binder on a table somewhere, containing the property disclosures. When the buyer gets half-way serious about the house, their agent then requests a copy of the “packet” from the seller’s agent. Some packets are better than others. Here’s how.

A good packet will contain a current pest control inspection from a locally known and reputable company. Next will be a general home inspection report, written in narrative form, also from a locally known and reputable inspector. If the general inspection revealed specific and serious defects, i.e. a suspect foundation or an exceedingly old furnace, these findings would be followed through with specialty inspections, i.e. engineering or heating contractor. Next up would be a video inspection report of the sewer lateral. Lastly, you would find disclosure forms completed by the seller with their specific declaration of defects, malfunctions, hazardous materials, work done with/without permits, natural hazards, earthquake retrofitting and lead based paint.

A “not-so-good” packet can come in two forms. The first would be a very “skinny” packet, perhaps with just a pest report from an unknown, out of area inspector. Or the seller just replies “don’t know” to just about every question.

The second is the exceedingly “fat” packet. A fat packet might have all the good stuff included but it is buried amongst a ream of only marginally relevant, and often, very old information. The seller’s agent might even include all the disclosures from the previous sale, even after a house has been completely renovated. Some of these fat packets have been 150 pages, or more!

Whenever you see a fat packet, you can be sure that at some point in the past, the listing agency (not necessarily the agent him/herself) has been sued for failing to disclose something. The fat packet is strictly a lawyerly response to the question “what is important to disclose?” Answer: “Don’t try to figure this out. Give them everything!”

Now, I’m certainly not advocating that a seller shouldn’t disclose something from a previous sale, or distant history. But the listing agent should take the time to cull the packet for the most relevant and timely info and place this first. The rest of the stuff can be given to the buyers after their offer is accepted, assuming the buyer has an inspection contingency.

Needless to say, unnecessarily fat packets are a pet peeve of mine. On my listings, I spend a lot of time thinking through what does, and doesn’t belong, in the packet. I make sure the info is presented in a logical sequence, and that most, if not all questions about the condition of the property are easily answered. This way, the buyer can feel comfortable making their offer “as-is” subject to their own inspections. If I’ve done my job right, then the buyer’s inspectors won’t come up with anything that I didn’t already cover in my packet.

Brett Weinstein

The typical home sale in Berkeley, Oakland and surrounding areas involves the seller providing a “disclosure packet” to prospective buyers before they make an offer.  There is no set requirement of what is contained in the packet, but it will usually include a pest control inspection, a natural hazard disclosure, and various statutory disclosure forms completed by the seller. 

The buyer then makes an offer “as-is” in regards to all the disclosed information, but still subject to their ability to inspect the property themselves during an inspection contingency.  At the end of the inspection period, the buyer can do one of 3 things:

1. They are satisfied with the results of their inspections and still want to buy the house per the original terms. The inspection contingency is removed.
2. They are not satisfied with their inspections and wish to back out of the transaction.  This can be done without penalty.
3. They still want to buy the house, but….

The “but” is that they want the seller to agree to a price concession based on information learned during their inspections. Here’s where the notion of “good faith” comes in.

If the buyer asks the seller for a concession based on information that was contained in disclosure packet, I would consider this done in “bad faith.” This takes a lot of nerve, and certainly will not please the seller.  Will the seller agree? Only if there is nothing better on the horizon, or he is desperate.

However, if the buyer is asking for a concession based on newly discovered info, something not covered in the disclosures, I consider this fair game, and done in “good faith.”

The moral of the story is that the more thorough the disclosure packet, the less chance for a buyer to discover something new in the course of their inspections. I’ll cover what constitutes a thorough disclosure in another post.

Brett Weinstein

Oscar Myer Weiner

Oh, I wish I was an Oscar Myer weiner,
that is what I truly want to be, ee, ee,
oh, if I was an Oscar Myer weiner,
then everyone would be in love with me. 

Are you old enough to remember the advertising jingle “I wish I was an Oscar Myer weiner”? This comes to mind when thinking about putting a house on the market right now, the first week following the Labor Day weekend. This is the traditional start of the Fall real estate season, when the market wakes up after its two month (July and August) holiday. But there is a big cloud hanging over the market, in the form of low consumer confidence and the still-lingering effects of the sub-prime mortgage collapse. Many neighborhoods have experienced near-zero sales in July and August, so the backlog of unsold houses will join the numerous new listings that are likely to come on the market in the next two months. By definition, when supply is high and demand low, prices get very soft. So it’s not exactly a great time to sell. Unless….

Unless you live in one of the few neighborhoods in where demand has kept steady and prices continue to rise, even dramatically. Yes, they do exist. I’m speaking of the North Berkeley flats, as well as lower Rockridge. These two neighborhoods have defied all reports of doom and gloom, with multiple offers and huge overbids reminiscent of the glory days of the not-so distant past.

So instead of wishing to be a hot dog, but to the same tune: “I wish I was a North Berkeley or Rockridge listing….”

-Brett Weinstein

Boy, it is rough out there for anyone who bought a house in the last 12-18 months and now has to sell. Whether because of a job relocation, or simply to get out from under unexpectedly high loan payments, or a job loss, etc, a lot of sellers are seeing a big drop in their home values.

Some clients of mine bought a house last year for $1,382,000 but decided to move back to their old house that they had rented. We listed it for $1,399,000 but had no action. It wasn’t until we dropped the price to $1,349,000 that we got an offer for $1,300,000. After a few rounds of negotiations, we settled at $1,340,000. The sellers weren’t happy, but at least it wasn’t any worse.

Another client of mine didn’t do so well. She bought her house from another agent just 10 months ago for $599,000, with a $500k first loan and a $100k loan from her mother. But due to some change in life circumstances, she found the monthly payments too stressful. I listed it for $575,000 but there was absolutely no action. Then, the house right next door to it came on the market as a REO, a property owned by a bank after having foreclosed on the prior owner. . It wasn’t as nice a house architecturally but it wasn’t horrible. But it had almost twice the square footage and was listed for just $550,000. Bad news. So we dropped our price to $545,000 but still no action.

After commission and closing costs, even a $545,000 sales price would have meant the seller’s mom would have lost her entire $100k investment. But it was clear that the market in this neighborhood was really suffering. I gave the listing back to the seller, who relisted with a family friend for $499,000, subject to short sale approval. But now 4 weeks later, at a price 20% lower than what she paid, she still has no offers.

A Short Sale is when a lender agrees to accept less than what is owed on a mortgage instead of having to foreclose. Given the huge rise in foreclosure rates across the country, and the fact that home values have fallen, lenders realize that it is in their best financial interest to accept 80-cents on the dollar, or some other percentage, just to avoid the also costly foreclosure process.

You can be assured we will be seeing a lot more of this in the months to come.

Brett Weinstein