Home Buying 101 Series: The Home Stretch

October 15, 2019

We’re back with our Home Buying 101 Series and it’s time to wrap up disclosures! Last time, I discussed the various disclosures that a seller provides to a buyer. We’re now going to review the disclosures that are given to the buyer AND the seller by the brokerages or agents who represent them. Let’s jump right in, shall we?

One of the very first documents that a buyer or seller receives is an AD (Disclosure Regarding Real Estate Agency Relationship). This form discusses what an agent’s obligations are to each party involved in the transaction. It also covers the responsibilities that are required if an agent is representing both parties (dual agency). Additionally, this document states that a buyer or seller should contact a competent professional for legal or tax advice.

Next up is the Affiliated Business Arrangement Disclosure. This form makes the buyer or seller aware of any third parties involved in the transaction. This could be anyone from an insurance company to an escrow company to a home warranty company.

A buyer will also receive an MCA (Market Condition Advisory). I call this the “cooling-off form”. Sometimes, in the frenzy of multiple offers, a buyer will give away their contingencies just so they can get the property. However, giving this form to a buyer as they’re writing an offer helps them really consider what they’re doing. The MCA goes over market conditions and the potential risks in those changing conditions. It also talks about buyers writing non-contingent offers, the dos and don’ts of a loan, appraisals and inspection contingencies. This form also advises sellers on the value of a property and how an agent will give them comparable homes that have sold in the area, but it is ultimately up to them to decide at what price to list their property.

The PRBS (Possible Representation of More Than One Buyer or Seller-Disclosure and Consent) discloses how a brokerage represents many different buyers and sellers and the impact that has on either party. It discusses dual agency again, and also lets buyers know their offer may not be confidential. Unfortunately, hackers and scammers are alive and well. Because unsuspecting buyers have unknowingly wired funds to hackers and scammers, we now have to make buyers aware that they need to confirm wiring instructions with their escrow office, using the WFA (Wire Fraud Advisory).

The SBSA (Statewide Buyer and Seller Advisory) is generally signed with the purchase agreement or shortly thereafter. It is a 57-paragraph, 12-page document that educates the buyer and seller on what they should be aware of in the purchase or sale of a home.

Hang tight, we’re almost there!

There are two final disclosures that happen during the buyer-contingency period of a transaction. The first disclosure is the LAD (Local Area Disclosures for San Diego County.) This document discloses numerous things to a buyer, like if the home is in a flight path.

The final disclosure form given separately by the buyer’s agent and listing agent is an AVID (Agent Visual Inspection Disclosure.) This form is exactly what it sounds like. The agent walks through the home and writes down anything that he or she visually sees, hears, or smells at the property. Note: This is not to replace a home inspection by a qualified CREA-certified home inspector. The agent will generally note things like stains in the carpet, scuffs in paint, or it could note that the seller installed new flooring in the living room, etc.

Well, that’s it, can you believe it? Of course, in the real estate world, laws and forms change often and can affect the process. By this time next year, there will be additional changes – guaranteed! This is why it’s important for both buyers and sellers to work with an agent who treats their real estate career as a business. It’s not a hobby, or a way to make extra cash while working another job. Your largest purchase should be facilitated by someone who knows the law and has their hand on the pulse of the current market. In other words, you want an agent who is focused on real estate!

In the coming months, we’ll have experts from title and escrow companies inform you about what goes on in their world during a home purchase. If you missed out on the other posts in our Home Buying 101 Series, you can revisit them here: Preparation is Key, Navigating the Waters of House Hunting, Offer Writing and Negotiating, You’re in Escrow! and Disclosures, Disclosures, Disclosures.

In the meantime, if you’re considering buying or selling this year or next, it’s never too early to seek the advice of a real estate professional and lender. Please do not hesitate to reach out to me at 619.405.7673 or homes@livininsd.com.

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