Sunday, June 12, 2011

Buyer Beware! (Part 1:Snake Infested House)

This poor, poor couple! They bought their "dream home" only to find out that under their home is a snake den with thousands of snakes. In fact, the home had been on TV even before they'd purchased... and no one told them. I found the story on a social networking site where the question was asked:  "Did the seller have to disclose this to the buyers?"

So, do sellers have to disclose such things?  The answer varies state to state.  In Virginia, the answer may shock you. 

In short: NO.  Here, it's "Caveat Emptor" or "Buyer Beware".  You, as the purchaser are required to do your own due diligence and discover defects of the home on your own.  In this case, the home was bank owned, so it's very likely that the bank didn't even know of the issue.

Real estate agents in Virginia have a heavier burden of disclosure than sellers.  If any agent in the transaction has knowledge of a "material defect" about a property they are required to disclose it.  A material defect is any thing that might impact a buyers decision about purchasing or what to pay for it....for example thousands of snakes taking up residence under the home.  I am pretty sure that qualifies.

Without relying on someone knowing of the issue and disclosing it, how would the buyers discover this on their own?  I watched the video, and wondered how they didn't notice thousands of snakes sooner... unless perhaps it was colder weather and the snakes were in hibernation.  Assuming that was the case, there were still opportunities:

  • The owners said the water smelled badly.  Didn't they turn on the water in the home before they purchased?  
  • Did they have a government loan to purchase?  If so, many government appraisals require appraisers to inspect the crawl space - where it would have been (hopefully) noticed that there was an infestation.
  • Did they have a home inspection?  A home inspector should have had many opportunities to flag issues - inspecting the crawl space, the smell of the water and likely several other issues.
  • Did they have a well and septic inspection? Water tests?  These are standard in our area, and also provided opportunities for the buyers to learn of the issue.
And what about the real estate agent?  In the video they said their agent had noticed the water smell and put bleach into the water system to try to get rid of the smell.  That made me gasp. 

Homes which have well water and sit vacant for extended periods of time do develop bacteria in the well and the water system... and often bleach is used to "shock" the system and kill the bacteria.  Then the pipes all need to be thoroughly flushed (because drinking bleach can kill you).  That's all normal, but this is NOT the job of a real estate agent.  Ever.

I don't know if that agent was the listing agent or a buyers agent.  Buyers agents have a higher duty to disclose things to the buyers, so it is an added layer of protection.  That may or may not have helped in this case, but I like to think as an experienced buyers agent I would have seen "red flags" that those buyers just didn't see.  If their buyers agent had noticed that smell and attempted to cure it without advising the buyers, that would be a major, major issue.

So what are the take away lessons here:
  • Buying a home is a MAJOR financial transaction and impacts more than just your finances.  This is about your life!
  • In Virginia, remember "Buyer Beware!"  There is very little that a seller is required to disclose, and his agent will only disclose things they have actual knowledge of and that they believe are material defects.
  • Hire good people to competently represent you and look out for your best interests.  This means a hire buyer's agent, a good one, and follow their advice.  Have the home, well and septic inspections and water tests which will be recommended by your agent, and use the professionals they recommend.  Experienced agents have  a group of experts they've used before and who they know they can rely on to conduct these tests and others as needed.  These things are not designed to complicate the home buying process or to make it more expensive.  It's to help you.
  • Keep your eyes wide open during a transaction.  Do not become overly emotionally involved in any purchase.  It's better to walk away from a good deal than to be trapped in a bad one.
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