FSBO Horror and Failure to Disclose Property Defects
I keep getting search result hits for the string "fsbo horror." It's an amalgamation because I haven't done any postings on this specific subject.
Both buyers and sellers have problems relating to For Sale By Owner issues.
For sellers, the largest issue seems to be properly disclosing all relevant items to satisfy the liability issue. There are resources available, but the question is whether the you took proper advantage of them and made all the legally required disclosures on any issue with the property there may be. If you have an agent that fails to do this, you can sue them. If you are doing it yourself, the only one responsible is you. You are claiming to be capable of doing just as good a job as the professional, and if you didn't do it right, the buyer is going to come after you.
Now I'm going to leave the marketing and pricing questions out of the equation, because with a For Sale By Owner most folks should understand that in return for not paying a professional to help you, you've got to do it yourself. What many For Sale By Owner folks seem to fail to understand, however, is that if you haven't met legal requirements, the real nightmare may be just beginning when the property sells.
Let's say it was something fairly innocuous, like seeping water from a slow leak you didn't know about. A couple years pass, and now there's mold or settling. Perhaps the foundation cracks as a result of settling. Bills are thousands to hundreds of thousands of dollars. Your buyer goes back and finds that your water usage went up by fifteen percent in the six months before the sale. He sues, saying that even though you didn't know, you should have known based upon this evidence. Court cases are decided based upon evidence like this every day. A good lawyer paints you as maliciously selling the property as a result of this. Liability: Steep, to say the least.
Now, let's look at it from a buyer's prospective. You have a choice of two identical properties. In one, a seller is acting for themselves, in the other, they have an agent. The price may be a little cheaper on the for sale by owner one, or it may not. One of the reasons people do for sale by owner is they are greedy. But when I'm looking at a for sale by owner, the question that crosses my mind is "Are they rationally greedy, or are they just greedy?" Are they going to disclose everything wrong or that may be an issue with the property? At least here in California, the agent has pretty strong motivation to disclose if something is wrong that they know about. If they don't, they can lose their license, and even if they don't, they have potentially unlimited personal liability. If they did disclose, they're probably off the hook, and even if they aren't, their insurance will pay for the lawyers, the courts, and any liability. If there's one thing all long term agents get religion about, no matter their denomination, it's asking all of the disclosure questions.
This is not the case for many owners selling their own property. Some are every bit as good and conscientious as any agent. A good proportion, however, are intentionally concealing something about the property. What's going to happen when it comes to light? If there's an agent, there's a license number, a brokerage who was responsible for them, and insurance. The latter two are deep pockets targets for your suit, and you can find them. Once that owner gets the check, you can find them unless they're dead, but they may not have any money. Even if they do have money, it may be locked up and inaccessible via Homestead or any number of other potential reasons.
One of the reasons that I, as a buyer's agent, am always leery of a for sale by owner property is that I have to figure that first off, there's a larger than normal chance that this property has something wrong that's not properly disclosed. When that happens, my client is going to be unhappy. When my client is unhappy, they are going to sue. The first target is the seller, but if they're gone or broke, who does my erstwhile client come after? Me. So I have to figure that not only is there a larger chance of there being something wrong, I have to figure there is a larger chance of me being held responsible for something I took every step I legally could to avoid. For Sale By Owner properties usually have to be priced significantly under the market in order to persuade me that not only am I doing the right thing by my clients in trying to sell them this property, where my clients have to pay my buyer's agent fee out of their pockets rather than out of the selling agent's commission, but also that the heightened risk of future problems is worth more than the price differential to my clients. Unless the answer is a strong solid "yes" that I can document in court if I have to, I'm going to pass it by in favor of the agent-listed property next door or down the street.
Caveat Emptor (and Vendor).
UPDATED here
Categories
Buying and Selling1 TrackBacks
Listed below are links to blogs that reference this entry: FSBO Horror and Failure to Disclose Property Defects.
TrackBack URL for this entry: http://searchlightcrusade.net/mt/mt-tb.cgi/2219
I keep getting search result hits for the string "fsbo horror." It's an amalgamation because I haven't done any postings on this specific subject. Both buyers and sellers have problems relating to For Sale By Owner issues. For sellers, the... Read More
blog advertising
--Blogads--
blog advertising --Blogads--
My Links
-
Heavy Lifters
- Instapundit
- Michelle Malkin
- Scrappleface
- Volokh Conspiracy
- Captain's Quarters
- Wizbang
- Victor Davis Hanson
- Eject! Eject! Eject!
- Michael Barone
- The Victory Caucus
- The Truth Laid Bear Places I get to as often as I can
- The Command Post
- Good News Central
- Icerocket
- Life Liberty Property
- MEMRI
- Raging RINO Community
- Technorati
- Transparency International
- Wide Awakes
- The Anchoress
- Argghhh! R
- Armies of Liberation R
- Asymmetrical Information
- Austin Bay
- Belmont Club
- Big Lizards
- Tim Blair
- Cox and Forkum
- Dr. Sanity
- Kevin Drum
- Gateway Pundit
- Hugh Hewitt
- Iraq the Model
- Jeff Jarvis
- Jihad Watch
- John Leo
- Lileks Screed
- Little Green Footballs
- Josh Marshall
- Mudville Gazette
- Neo-neocon
- WSJ OpinionJournal
- Politburo Diktat R
- Powerline
- Powerline News
- Protein Wisdom
- Q and O L
- Real Clear Politics
- Mark Steyn
- Stop the ACLU
- Strategy Page
- Don Surber R
- Vodkapundit
- Watching America
- Matthew Yglesias
- Michael Yon Personal Finance, Economics and Business Sites
- Bloodhound Blog
- Consumerism Commentary
- Eidelblog L
- The Entrepreneurial Mind
- Finance Blog
- Financial Rounds
- Free Money Financea>
- In Cash Flow We Trust
- I Will Teach You To Be Rich
- Mortgage Fraud Blog
- No Credit Needed
- Old Niu's Blog
- Pacesetter Mortgage Blog
- Personal Finance Advice
- pfblogs.org
- Social Security Choice
- Students for Saving Social Security Other sites I've linked and visit
- Accuracy In Media
- Ace of Spades
- The Agitator
- All Things Jennifer R
- Ann Althouse
- American Citizen Soldier
- The Anarchangel L
- Angry in the Great White North L
- Antigravitas L
- The Anti Idiotarian Rottweiler
- Art of the Blog R
- Atlas Shrugs
- aTypical Joe R
- Professor Bainbridge R
- Baldilocks
- Barcepundit
- Beldar
- Belgravia Dispatch
- Below The Beltway L
- Blackfive
- The Buck Stops Here
- Catallarchy L
- Chapomatic
- Chequer-Board of Nights & Days
- Clarity and Resolve
- Classical Values R
- Combs Spouts Off L
- Common Sense and Wonder
- The Counterterrorism Blog
- Countertop Chronicles R
- Coyote Blog
- Daily Howler
- Daily Pundit R
- David's Medienkritic
- Dean's World R
- Decision '08 R
- De Doc L
- Brad DeLong
- Democratic Peace
- Different River
- Digger's Realm R
- Done With Mirrors R
- Drink This
- Drudge Report
- DUmmie FUnnies
- enrevanche R
- Eschaton
- Evolution R
- Fearless Philosophy L
- Forward Biased L
- Generation Why?"
- Happycrow's Eyeball Factory L
- Hold The Mayo L
- Huffington Post
- The Idiom
- IMAO
- INCITE L
- INDC Journal R
- Inside Larry's Head R
- Inoperable Terran
- Iowahawk
- It Comes In Pints?"
- The Jawa Report R
- Just One Minute
- Justus for All R
- Kausfiles
- Ezra Klein
- Daily Kos
- La Shawn Barber
- Liberals Against Terrorism
- Libercontrarian RL
- Libertarian Leanings R
- Liberty Papers
- Carol Platt Liebau
- Llama Butchers R
- Mensa Barbie
- The Moderate Voice
- Mossback Culture R
- Mover Mike L
- Mr. Completely L
- National Review Online
- No Angst Zone L
- Normblog
- Brendan Nyhan
- Ogre's Politics & Views L
- One Fine Jay R
- Owlish Mutterings L
- Patterico's Pontifications
- Peter Porcupine L
- Bradford Plumer
- Pole Dancing In The Dark L
- Political Calculations
- POV R
- Publius Pundit
- Radio Equalizer
- Reasoned Audacity
- Respectful Insolence R
- Rhymes with Right L
- Riehl World View
- Right Place
- Right Reason
- Right Thoughts R
- Right Wing Death Beast
- Right Wing Nut House
- ROFASix
- Samizdata
- Say Uncle RL
- Debbie Schlussel
- SCOTUS Blog
- Roger L. Simon
- The Strata-Sphere R
- TacJammer
- TalkLeft
- TAPPED
- Target Centermass L
- Technography R"
- Tempus Fugit
- Texas Best Grok L
- Tigerhawk
- Link Text
- Tinkerty-Tonk R
- Tom Rants RL
- Unalienable Right
- Uncommon Insanity L
- Unrepentant Individual L
- Villainous Company
- Oliver Willis
- Willisms
- The World According to Nick R
- World Wide Rant R Link Exchanges, etcetera
- But That's Just My Opinion
- Condo Buzz NYC
- Crazy Rants of Samantha Burns
- DANEgerus R
- A Dollop of Sour Cream
- Dust My Broom L
- Generic Confusion R
- Grim's Hall
- Heartless Libertarian L
- individ L
- Kesher Talk R
- Leaning Toward The Dark Side R
- Libertopia L
- Liberty Corner L
- Medary L
- Mondo QT L
- Nose On Your Face R
- Pererro R
- Pratie Place
- Random Fate R
- Ravings of John C. A. Bambanek L
- Signifying Nothing R
- The Skwib L
- Tel-Chai Nation
- TF Sterns Rantings L
- DC Thornton R
- Wake Me Up On Judgement Day R
- Windypundit L Consumer and Research Sites
- Better Business Bureau
- Consumer Reports
- NASD Home
- California Department of Real Estate
- California Licensee Lookup
- California Department of Insurance
- National Association of Insurance Commissioners (NAIC)
- Do Not Call Homepage
- IRS Charities Search
- Internet Fraud Complaint Center
- SEC Home Page
- Stop Mortgage Fraud
- Report Mortgage Fraud Debunking Many so-called Real Estate Gurus
- John T. Reed Other research
- FactCheck.org
- Babel Fish Translation
- Snopes Worthwhile Web Comics
- Sluggy Freelance
- Day by Day
- User Friendly
- Kevin and Kell It is site policy to list the main page of every site I reference. Sometimes the real world intervenes and I haven't gotten to it yet, or one falls through the cracks on a long post with multiple references. It is also site policy to list the main page of every site that lists this one on their equivalent roll, as well as the main page of all sites that are members of any of the same groups this site is a member of. Please send me an email with a link to the main page of your site if I've overlooked you (dm at the domain name). For the clue-challenged, note that it is a requirement for your link to appear on every page of your site, just like mine does, and I will not link to spam sites. Honor Roll of Sites Banned by Paranoid Repressive Governments: (be the first on your block to submit a link!)
Requests for reprint rights, contact dm (at) searchlightcrusade (dot) net! Subscribe to Searchlight Crusade
C'mon! I need to pay for this website! If you want to buy or sell Real Estate in San Diego County, or get a loan anywhere in California, contact me! I cover San Diego County in person and all of California via internet, phone, fax, and overnight mail.
**********
Contact me! dm (at) searchlight crusade (dot) net (Eliminate the spaces and change parentheticals to the symbols, of course)
Leave a comment