Why ask a question if you don’t want to know the answer? Why does anyone ask any question? You would think it’s because they want to know more; they want to know the why or where or when or who or what of something they are interested in. But sometimes people don’t ask any questions at all and take action or make a decision based on their gut or their instinct. Now those are two very reliable sources of pleasure and pain, granted, but should they be the sole resource for an impending decision?
Let’s take the process of purchasing a home. Over many years in this industry, I have seen occasions of financial loss, hurt feelings, anger and distrust come out of a home sale transaction. No two deals are the same, but there are similarities. Most sellers will prepare a Property Disclosure Statement for the prospective buyer. These are not warranty documents, but more a snapshot of the seller’s knowledge of the condition of the home and related issues (everything from zoning to access).
Typically the buyer will sign the form acknowledging receipt. But how many buyers read and understand the document? Probably a minority of buyers understand everything about the condition of a home and the materials used to build and maintain it. Should a buyer know what type of plumbing pipes are good and which kinds are not so good? How about aluminum wiring for electrical service in the home? Should a buyer already know what red flags to look out for, or what sort of information would motivate them to ask more questions?
Ahh, and isn’t that the big deal? Asking more questions… As in – MORE questions than the referenced document readily answers. Anything wrong with digging deeper, looking farther, asking more questions? No, in fact it should be encouraged. If one or two questions were asked during escrow, there might be fewer problems later on. But the buyer may not know what questions to ask. They may not know what information to seek to ensure they have all relevant information before closing.
If the buyer learns that the vacant parcel across the way is the future site of an AutoPark with 4 different car dealerships and related lighting and traffic, would that influence their decision on whether to buy that home? Sadly, some professionals might mumble what they already know about it hoping not to jeapordize the deal. On a smaller scale, what about that aluminum wiring? Is that a problem?
Those of us that claim to be real estate professionals should never put ourselves out there as experts on things such as that. But we darned sure should be helpful when and if the buyer starts asking questions. Maybe we should help them find out where to go for the answers. For the AutoPark, how about City or County land use departments and City Council or County Commissioner meeting minutes? There would be media coverage of the development and the governmental approval process would turn up with a little research.
And the wiring question? Let us assume the buyer is getting an inspector to prepare a report of all issues that the buyer should know about. That will cost them several hundred or more. Shouldn’t the buyer provide the inspector with a copy of the Property Disclosure form and ask if there is anything in it that might be of concern? So what if the inspector wants to charge an extra $50 for the time and effort involved? If a buyer is about to spend $400,000 on a home, I would hope they are willing to spend a little money during escrow to make sure they are getting the home they want, not one potentially riddled with defects and problems.
Another area I love to observe; headlines and media reports of how the real estate market is behaving. If one were to draw conclusions from just the headlines of every article published about real estate, there is absolutely no way a consensus could be arrived at. Just today, in the RealTrends weekly e-letter, the Denver market was touted as a hotbed of sales activity, with some 40% of the current inventory going under contract in just the most recent months. I could provide an exact quote if you want it.
Yet then we read a headline that says the estimate of underwater homes has increased to somewhere around 12 million nationally. These homes will somehow and in some way hit the market in our lifetimes. Maybe some will be foreclosures while others will be sold as short sales. And some of those homeowners will stay put and keep making payments, despite knowing they will not have any equity in that home for another 5 or 10 years.
Those homes, however you count them, will have a dampening effect on any real estate market. Please remember the sage old saying: all real estate is local. What is going on in Cleveland or Jacksonville may not reflect what is happening in Northern New Mexico. The Santa Fe, NM residential real estate market is doing its best to move into positive territory. But ask around and gather as many expert opinions and statistical figures as you have time and energy for. Then maybe draw some conclusions or make some general statements that you would tell your friends or put into writing. Ask questions and wait for the answers. Then decide.