Tuesday, January 11, 2011

In Real Estate, the Devil is in the Details

Tuesday I attended the City of Raleigh Public Works committee meeting because there was an item on the agenda that impacted some of my listings. Parking. Go figure. Being last on the agenda meant sitting through a few other topics. Normally people dread this activity, but I think it is fascinating to hear the debates and comments. I always learn something.

Tonight's topic was assessments. Being a public works committee, it was about sewer becoming available to neighborhoods outside the city. The agenda item was specific to a few lots, but several people from the neighborhood were present to dispute the assessment.

The link to real estate is that there were several homeowners present at the meeting who claim that they never knew about the assessment. One in particular had recently purchased the property. The date of the assessment notification was 2004, according to comments made. That's six years ago. An assessment is a material fact. Right there in the Residential Property Disclosure statement (required by property owners selling their homes) it asks, #18, "Lawsuits, foreclosures, bankruptcy, tenancies, judgements, tax liens, PROPOSED ASSESSMENTS, (all caps for emphasis on my part), mechanics liens, materialmen's liens, or notice from any government agency that could affect title to the property?" If yes, you check the box.

This form exists to disclose all necessary items to the next owner. If an owner lies, the agent may have no way of knowing. But what I think is necessary, in some cases, is for the agent to cite examples of the types of things that the homeowner may have forgotten about. An agent asking "have you gotten any letters from the City, even going back several years?" might prompt an owner to remember something. A helpful agent can educate the homeowner on why these answers are important. Not to say that didn't happen here, but things like this make me want to polish my own procedures to help homeowners do the right thing.

After sitting through this meeting tonight, you better believe that if I am ever involved in a listing or purchase on the outskirts of the city, I am checking that assessment website! Or even calling the city. And making double sure that the owner has not received notice from anyone. I didn't realize the time lag between notification and actual billing. It can be years. But HOA's can have assessments, too, so condos aren't off the hook.

This woman in particular would never have bought that property if she knew a $4000 assessment was coming. Who is to blame? The previous homeowner. Should the real estate agent have known? Was there a real estate agent? Normally the attorney would catch it if no one else did. Somehow, it was missed. And now this woman is on the hook.

I feel for her. I really do. She had done everything she thought necessary. She has all her paperwork. She is organized. You can tell she's on top of things. These meetings really let you see how one small misstep in a real estate transaction can impact a person. Was there evidence of something new? Was there still fresh construction from the installation? If so, that should have been a clue to someone to ask questions.

Buying a house is more than finding the right layout and view from the backyard. There is a whole team of people that work for you. Your agent, your lender, your attorney, and anyone else that comes into the picture - inspectors, contractors, etc. If they do a good job they should help prevent things like this from happening, which is what they are being paid to do - look out for your best interests. (Disclaimer - I'm sure there are things that people can't possibly know about. Unfortunately there's a first time for everything).

I came away from this meeting with the idea that all agents should go to at least 3 meetings with their county or city related to property before getting their license so that they can be aware of how things work. It's one thing to read it in a book. It's quite another to see things in reality, with real people and real money.

What happened here? Did the homeowner simply forget? Maybe that's the case. But as an agent, I think we need to remind sellers and buyers about these things and walk them through the paperwork so that they understand why the questions are being asked. I know I'm adding a few more items to my usual checklist.