Understanding Disclosure Packages is lot like giving birth. Labor takes forever the first time around, but it gets quicker with each succeeding pregnancy. (I didn't say easier, I said quicker.) Trust me, you'll get much more adept at digesting the mounds of materials each time you give it another go. AND just like labor, it's a hell of a shock to the system, so remember to BREATHE!
With the buying season already in full swing, Buyers are out and about and anxious to buy (that's the good news). Unfortunately, available inventory hasn't caught up with this early demand; thus we already have examples of 30, 40 or 60 (!!!) disclosure package requests on select properties and it's only February. (That's the bad news.)
Disclosure package requests - in and of themselves - don't necessarily tell us how many people will actually write on a property, but you can lay odds that if double-digit disclosures went out on a particular home, about 30% will actually take the next step and write an offer. On one sweet house on which I presented earlier this week, there were 27 confirmed offers, so yes, there is a definite correlation between the number of package requests and the number of offers that ultimately show up.
Sadly, unless you are writing non-contingent in this scenario, it's unlikely that you'll be able to compete against such stiff competition (not that "non-contingent" offers are a Realtor's first choice, but they certainly speak emphatically to Sellers.) With only one winner taking home "the baby," that leaves 26 disappointed Buyers looking for the next opportunity. Emotions aside, you are best served when you adopt an attitude that says: "On to the next!" Happily, the Spring Market is on its way and they'll be other homes that strike a chord. (I promise.)
With each house that a Buyer seriously considers, their Realtor will (or should) request a "Disclosure Package." For those of you who've yet to take this journey, the disclosure package is typically 150 - 300 pages of inspections, reports, seller questionnaires, city and county point-of-sale ordinances, contractor bids, permit histories, preliminary title reports, hazards disclosures, county addenda, and on and on and on. . . (don't get me started on condos; they're far more cumbersome). By the time you request a disclosure package, you're essentially in your third trimester and anxious to get beyond sleepless nights and sore feet. "Hey, let's get this done already!" In fact, like pregnancy, don't do it, unless you're absolute sure you're willing to put up with the discomfort and the labor pains.
When we summarize these disclosures for prospective Buyers, the notations can be startling, to say the least. (No, it's not morning sickness; it's the underbelly of a home.) In fact, the remarks often sound something like this:
So if you are a qualified Buyer, expect to write on several properties before you convert your offer into the winning bid. AND as you'll also be reading your fair share of disclosures (or should be!), the next logical question is:
What's important in a disclosure package and what isn't?
John Karnay and DJ Grubb, my Brokers here at The GRUBB Co., would tell you that it's ALL important and they'd be right, but for the sake of time and your sanity (as well as mine) let's break down what you need to pay special attention to as many of these documents ARE, in fact, standard, and in all likelihood, the "right to farm" ordinance isn't going to apply to your next home.
At the top of my list are:
Less important are the many boiler-plated documents that cover anything that might happen on any property in the state of California. Tsunami warning? Yes, it's in the Alameda County Addendum, as are farm animal rights, septic systems, beach erosion, and many other items we rarely come across here in Oakland (save a chicken or two). So give these a quick glance, but focus your time and attention on the reports that actually are specific to the particular property on which you plan to bid.
While all this paperwork can seem daunting (and it is), it's there to protect both they Buyer and Seller by disclosing the true nature and condition of a property for sale. BECAUSE . . . when you're bidding in a very competitive marketplace, at prices well, well, WELL (!) above the list price, you should absolutely have a sense of what you are reaching for. (That's only fair, but it's also legally required.)
In any case, you won't be slogging through these disclosures alone. My assistant and I have our yellow highlighters at the ready and we will be right beside you. Now, I've got to get back to work; I've got a lot of reading in front of me (and so do you)!
Sorry, but you're on your own for labor (I already did that dance). But don't stop breathing; we're just getting started . . .
(How can I help you?)
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Julie Gardner, has been writing The Perspective for 12 years and has published more than 500 essays. She is also a frequent contributor to the Sound Off column in the Real Estate section of The San Francisco Chronicle.