Does the buyer have a right to see the seller disclosure on property up for short sale before submitting offer to bank?

Asked by Gcl, 95833 Sun Aug 7, 2011

Seller's agent says I can't see disclosure until bank accepts short sale offer.

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CJ Brasiel, Agent, San Jose, CA
Sun Aug 7, 2011
BEST ANSWER
Gci -

Great question! A listing agent for a short sale should be happy to provide disclosures as soon as possible because if there is anything in those disclosures that is going to make a buyer cancel; why waste months of negotiating on the short sale just to have the buyer walk once they see the disclosures?

By contract, most short sales come with an addendum that states NO timelines start until short sale approval is received and that can include the number of days the seller has to provide disclosures once a contract is ratified.

It may be that the agent simply doesn't have them completed yet. Sometimes agents don't complete them because they can change over the sometimes lengthy time it takes to get short sale approval. Some office managers of certain brokerages will not accept disclosures dated over 30 days. So there may be many reasons that they are not providing disclosures now.

However, it may not be too much to ask for them to complete and pass on to you the TDS (Transfer Disclosure Statement). This is a general questionnaire that ask the seller what they know about the property. It is a three page document and can be very insightful.

The other option is to go ahead an complete inspections. The reality is, what you really want to know about a home will come out on inspections and not necessarily on the TDS. If you believe you are committed to the home and will go through with the deal and that the short sale has a high chance of being approved, then completing inspections ahead of time may be worth while. Most buyers don't want to risk the $500-$700 on inspections without approval but sometimes it works.

Talk with your agent about the options and see what they recommend.

Good luck!
CJ
Web Reference:  http://www.TalkToCJ.com
0 votes
Steven Ornel…, Agent, Fremont, CA
Sun Aug 7, 2011
Gcl:

There's no right to see them before you enter contract; however, l personally believe in providing the full range of seller disclosures as part of placing the property on market -- especially in a Short Sale! To me, it makes no sense to wait months for a lender approval(s) and then have the buyer walk due to a disclosure issue. In my opinion, providing the disclosures up front benefits all parties involved.

Best, Steve
2 votes
Suz A, Agent, Longmont, CO
Sun Aug 7, 2011
Gci:
Just an aside: additional due diligence that goes beyond inspections can be enlightening. The disclosure form can be just a smoke screen. How many people do you believe represent with complete honesty about what they know about a property? I give people the benefit of the doubt, but this is business. And, in a case where an absentee landlord is involved, you have to ask if the document is going to be enlightening at all. And how about heirs to an estate? They can claim complete ignorance. Inspections are going to be more telling. And why stop there?

Personal anecdote: I was interested in a property in Brentwood, CA about 12 years ago, but balked on going forward. Why? A visit to the city planning office produced information that a mysterious gasoline leak had been discovered running through the neighborhood. The neighborhood was distressed, needless to say, because the source of the leak was unknown. That seemed odd. You would think the neighbors would pressure the city to keep looking until they found the source and made someone fix it.

I could have negotiated a much better price taking the gamble that the city eventually had someone (like the neighboring service station) locate and stop the leak. But, I passed on the deal.

It's just good business to examine all available information.

I'm sure things will work out well for you, Gci. Great question!

Best,
SuZ
PML of Longmont, CO
1 vote
Mary London, Agent, Arden-Arcade, CA
Sun Aug 7, 2011
The answer is yes. If you make it a conditon, of course. If you don't, no harm-no foul, as you have much recourse before and after the bank approves you as the buyer whose offer will be acceptable. The previous answers were all appropriate. Mary London
1 vote
Kylee Roe, Agent, Sacramento, CA
Sun Aug 7, 2011
Gcl--
I concur with all the answers here, it's a matter of negotiation or adding it to your purchase offer that seller will provide disclosures--especially TDS and Seller Property Questionaire--at the time the seller accepts your offer. If not in the Agreeement, a verbal request should suffice, or write an addendum.

I would caution against requesting or getting the disclosures before you write your offer, as Margaret suggested. That might be good in Florida, but the Sacramento market is strong enough that while you're waiting for disclosures, some other buyer comes in and puts in an offer and gets the house in contract ahead of you. Get the home in contract, control that part of the transaction so you don't risk having the house bought out from under you while waiting for disclosures. If the disclosure info is alarming, you've plenty of time to back out of the deal.
Web Reference:  http://www.kyleeonline.com
0 votes
CJ Brasiel, Agent, San Jose, CA
Sun Aug 7, 2011
Gci -

@ Steve Ornellas kindly reminded me that not ALL timelines are subject to the short sale addendum (thank you Steve for the correction). For clarification:

CAR SHORT SALE ADDENDUM:

"TIME PERIODS. Time periods in the Agreement for inspections, contingencies, convenants, and other obligations:

(i) shall begin the Day After Seller delivers to Buyer Short Sale Lenders' Consent satisfying 1B. However time periods for providing pre-approval/pre-qualification letters and verification of down payment and closing costs shall be nonetheless begin as otherwise specified in the Agreement; or (ii) (if checked) __ shall begin as specified in the Agreement."

An oversight on my part as in this market very few offers are even accepted by the seller much less a bank seller without pre-approval and proof of funds to close.

I also agree with Steve and also provide disclosures upon seller acceptance of a short sale offer but not all agents do.

CJ
0 votes
Margaret Has…, Agent, Tampa, FL
Sun Aug 7, 2011
As an broker, I would recommend asking for the seller's disclosure before submitting an offer as the contents of the disclosure may influence the price offered.
0 votes
Erin, , South Lake Tahoe, CA
Sun Aug 7, 2011
Hi GCI; Anything is negotiable in real estate. If you want to see disclosures, if I were the listing agent, I would encourage my seller to let you see them. Why not.

Ask your agent to put it in writing and make your seeing the disclosures a condition prior to submitting your offer to the short sale lender.

Erin Phillips
Keller Williams Realty
916-580-2227
Web Reference:  http://SoldByErin.net
0 votes
Cathy Sloan, Agent, Jacksonville, FL
Sun Aug 7, 2011
Our MLS has a documents section attached to the listing. The listing agent can add PDF files. I ener the Seller's Disclosure document, copy of survey, copy of floor plan, etc so all Buye's agents have access to the documents to give to their Buyers at any time.
Web Reference:  http://move2jacksonville.com
0 votes
Morgan Larson, Agent, Folsom, CA
Sun Aug 7, 2011
Generally speaking, home owners don't fill out the seller's disclosures until they are in escrow. However, you have every right as a buyer to ask for the seller's disclosures prior to getting into contract on a home. If you were my client, I would ask in writing on the offer for these disclosures.

One thing I'd like to add though, is that a seller isn't always as knowledgeable about their home as you would like them to be. They may not know about items like the foundation, etc. So always make sure to have a professional home inspection completed. Hope this helps!
Web Reference:  http://www.MorganLarson.com
0 votes
John Hayes, Agent, Folsom, CA
Sun Aug 7, 2011
yes..a good agent will have disclosures ready for the buyers to review.
0 votes
Laura Coffey, Agent, Santa Clarita, CA
Sun Aug 7, 2011
Not how a normal purchase contract and short sale addendum is written if it is written that time frames will begin when the buyer receives written short sale approval. You can however have your agent modify the contract how it is written to make you feel comfortable.
However, keep in mind the seller would have to accept the terms.
Good Luck.
0 votes
Jim Walker, Agent, Carmichael, CA
Sun Aug 7, 2011
Sounds to me like that is a listing agent that wants you to back out. Maybe she has another buyer whom she wants to sell the property.

Whether it is your "right" to see it contractually depends on the wording of the contract.

But, I would think that she would want to accommodate a buyer with the disclosure to keep the buyer happy. After all the buyer is going to see it anyway. Withholding it now just seemed to raise a red flag for you.
0 votes
Steven lunet…, Agent, Sacramento, CA
Sun Aug 7, 2011
This is a very confusing question. I wish I could offer an answer, however I'm missing the point of your question. Maybe you can list more details.
0 votes
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