In most areas of the country, buyers and sellers of real estate using the services of a professional real estate agent are required to receive certain disclosures from their agent. The jurisdictions treat most disclosure issues similarly, though not identically. The order of the following items is arbitrary, and should not be interpreted by any reader as a reflection of the importance I place on a topic most of interest to them. In examples below, masculine and feminine, singular and plural, are used interchangeably for example purposes only.

Discrimination

In all jurisdictions, real estate agents cannot discriminate on grounds of race, creed, national origin, gender, nor based on most other criteria one can think of. The rule agents go by is, if the buyer is ready, willing, and able, the agent must assist regardless of the appearance, background, or beliefs of the buyer.

The buyer has a right to employ a professional home inspector to examine the home as a contingency to any purchase offer. As far as I am concerned, the buyer should ALWAYS have a professional home inspection. Keep in mind though that no home is perfect, and no inspector is all-knowing. Also, some inspectors simply have different professional interpretations of the same home issues. While not often the case, I have seen inspectors flag "problems" that are simply not problems at all.

A good inspector not only looks for problems, points them out and explains them -  they will also provide pointers to good home maintenance so the buyer will have a guide to getting the most from their investment.

Lead-Based Paint

Lead-based paint has been determined by the Federal government to be a potential health hazard, particularly to young children. Lead-based paint has been linked to lead poisoning and to learning abnormalities, among other conditions and illnesses.

Lead-based paint was banned in 1978, and its use was curtailed in the marketplace some time before that; manufacturers and users had notice of the impending ban. However, effective December 6, 1996, a home built in 1978 or before is designated by the Federal government as "target housing."

Buyers must receive a booklet from the US EPA describing lead-based paint hazards, and have an opportunity to make their purchase offer for their home contingent on>

The inspection is at purchaser's expense. However, a seller is not required to accept the offer with the contingency. The seller may elect to wait for a purchaser to waive a lead-based paint inspection.

A seller who allows a lead-based paint inspection from a particular buyer, and whose home fails the test, if that buyer elects not to buy the house, must disclose the test failure to any future buyer.

It is important to note that the lead-based paint inspection is NOT the same as a professional home inspection, nor the same as a radon inspection, common inspection contingencies in our area.

There are three different levels of lead-based paint inspection. In non- technical terms as they affect a sale, they may be termed most disruptive, least disruptive, and moderately disruptive. A purchaser who desires a disruptive inspection may be asked to agree to restore any damage to the property as a result of the test.

To minimize lead-based paint inspection issues, a seller should most seriously consider painting their home before putting it on the market, including but not limited to the paintable areas of interior walls, ceilings , and trim, exterior wood or particle board siding, exterior trim, and window areas that often are missed in pre-sale painting.

Agency -- The Agent Works for Me? Don't They?

The Realtor must disclose to buyer and seller at the earliest practicable time who they represent -- buyer, seller, lessor, lessee, and so on. An agent can represent both buyer and seller, or use a designated agent to assist in the representation and sale, provided all parties agree in writing , and subject to the laws of the particular jurisdiction.

I believe all buyers should be represented by their broker -- hence the term , buyer-broker. In our area, the commission the agent earns is usually paid by the seller on behalf of the buyer. And usually the amount of commission the agent earns is the same percentage of the sales price whether the selling agent is a buyer-broker or not. So having a buyer-broker usually costs the buyer nothing additional.

In fact, buyer-brokers potentially can save the buyer lots of money.

Sellers should also be represented by their listing agent, and in fact virtually all sellers who list their homes for sale are represented by their agent.

It is very important for buyers and sellers to know that technically the "agent" is the company the salesperson works for rather than the salesperson individually. So if the seller or buyer is represented by John Jones with ABC Realty, the "agent" of the seller or buyer in the legal sense is ABC Realty.

Let's say a buyer picks up the Sunday paper, sees an ad for an Open House, and stops by the see the house. The salesperson greets the buyer, shows the home, and buyer wants to buy the home. What then?

The salesperson most likely is representing the seller. This must be disclosed to the buyer. The buyer must have the right of having someone represent their interests, if they choose. (And sometimes, buyers don't care.)

ABC Realty may select a "designated representative" other than the listing agent to negotiate on the buyer's behalf. In this case, information that could influence the negotiations is strictly privileged, and cannot be shared without the parties' consent. Only the supervisory broker of the listing company could have access to both sides' information.

Property Condition

In most states, sellers of property generally must either fill out a property condition disclosure form to be made available to the homebuyer OR may fill out a disclaimer form. The disclosure form carries some post-sale risks to the seller, so many sellers choose to disclaim instead. The disclaimer form simply puts the buyer on notice that the seller is not an engineer or inspector, and that the buyer should get a professional inspection. In no case can a seller hide or fraudulently misrepresent property flaws.

Homeowners Associations

In the Metro Area many homes are located within communities that have homeowners associations or HOAs. In fact, some homes have more than one HOA. For example, in some areas, there is a master association with its own dues and disclosures, and then specific neighborhoods or condos usually have their own additional dues and disclosures.

The buyer must receive the appropriate disclosures in a timely fashion or the buyer may actually void the contract without penalty.

Some HOA management companies or volunteer representatives can be agonizingly slow in providing the documentation. HOA documents should always be requested in a timely fashion, but a buyer should be warned that there may be issues beyond everyone's control in getting those documents to you on time.

Conflict of Interest

In some cases, real estate agents may be affiliated with companies that have property management services, loan origination services, settlement or closing services, and so on. These should be disclosed to buyers and sellers alike. ReMax Distinctive Real Estate is affiliated under a common corporate umbrella with a lending institution. To avoid even the appearance of a conflict my buyers secure their financing elsewhere.

Financing, Insurance, and Closing Services

A buyer may secure their mortgage financing, homeowners insurance, closing services, inspection services, and repair services with any company they desire. And there are dozens of choices, which is often confusing. The agent may wish to recommend three choices, and have the buyer make the selection. Many of my buyers and sellers though are quite satisfied to have me make a choice. Regardless, I do not accept compensation from these companies and individuals. My sole criteria is good service to my clients.

Paperwork

With all of these disclosures, as you can imagine, the paperwork burden is formidable. In fact, a standard sales contract can be 6-12 pages, not including addenda for the items discussed above. It is the agent's job to guide the client through the process. Buyers and sellers must receive copies of everything they sign, without delay.

Lawyers

Buyers and sellers may wish to be represented by a lawyer, or simply have a lawyer review papers for them. If that is the buyer or seller's desire, that is their right and they should certainly do so. I am not an attorney. I am not an accountant. I cannot give you legal and tax advice. As an experienced real estate agent in the local marketplace, the advice I give you can cover a great deal of ground, but not advice that is properly the purview of attorneys and accountants. You may wish to have me recommend a lawyer or accountant experienced and skilled in their respective areas of expertise.

What is the difference between "pre-qualified" and "pre-approved"?
If you are "pre-qualified" you have determined, with a loan officer, what price you can afford based on the down payment, your debts and the amount the mortgage company will approve for your mortgage. Being "pre-qualified" is only a determination of your probable credit. If you are "pre-approved", your credit, employment and funds have been approved by the lender.

What are closing costs?
Closing costs are an accumulation of charges paid to different entities associated with the buying and selling of real estate. For buyers, they are usually about 4-6% of the total sales price of a property. Some of the closing costs you might encounter are: application fees, appraisal fee, county taxes, credit report, discount points, documentation fee, escrow fees, homeowners' association fees, loan fees, mortgage insurance, origination fees, tax registration and title insurance premium.

What is a point?
One point is equal to 1% of the new loan amount. Whenever government regulation, state usury laws and/or competitive practices prohibit the lender from charging a rate of interest that would make the real estate loan competitive with other fields of investments, the lender must seek some method of increasing the yield for the investors. By charging "points", the lender can bring the real estate loan up to those other investments.

What is earnest money?
When you make an offer, you will need to put up an earnest money deposit as a sign of good faith that you are seriously interested in buying a home. That deposit becomes a part of the purchase price and is held in a trust account until there is full acceptance of the offer. Typically, an earnest money is 3-5% of the offer amount.

What is title insurance?
Title insurance protects the named insured against loss because of defects, liens, encumbrances, adverse claims or other matters not shown or disclosed to the new owner that attach before date of policy.

Is VA or FHA financing unfair to sellers?
FHA and VA loans provide purchasers the opportunity to buy homes with minimal cash investment and at lower interest rates. The result is a larger market for sellers, who also benefit by receiving all cash for their equity.