The San Diego Home Blog

I’m feeling a little like a home buyer or seller today. You have a lot of choices. As an agent, I know this, but I also know the differences. More than occasionally, I find myself wondering, “Why did they hire them?” To me, an insider, the differences are so obvious, and the best are so easily picked from the litter. Today, I am getting it. Maybe the certifications were there, the rhetoric was satisfying and the years of experience were compelling. Not being one who lives and breathes real estate, I can understand the confusion you must feel.

Take pricing a home for sale. Pricing a home, even estimating probable sale price and market time, is not a precise science. Ask a dozen agents, and I can pretty much guarantee that you will get as many different answers. If you are relying on others to consult and to advise, I can appreciate the confusion you must feel, especially when the others can’t even agree among themselves.

As a home buyer or seller, you rely on us to guide you through the process. As your agent, we also must rely on others throughout the transaction to perform duties for which we are unqualified. This week, I found myself confused.

We have a seller client whose home is in escrow in Scripps Ranch. It is on final approach, actually. During the initial days under contract, we did what we always do. We ordered the Wood Destroying Pest and Organisms inspection. You know this as the Termite Inspection.

Now pricing a home is one thing. Your agent is having to rely on his knowledge of the market, of buyer and seller attitudes, of economic predictions, of seasonal trends and a multitude of other factors — to predict human behavior. No one can argue that this is an exact science. But, in the case of a termite inspection, one would assume (one being me) that it is extremely scientific. You either have a wood destroying pest or you do not. The holy grail of the pest inspection process is the “clearance,” and this clearance will say something along the lines of “the property is now free of evidence of active infestation.” Easy enough, but not so fast. 

The State of California regulates structural pest control firms, and firms making household treatments must be licensed by the California State Structural Pest Control Board. Licensing is required to ensure, among other things, that firms practicing inspection and treatment will be thorough, honest and accountable. We have worked with dozens of firms in San Diego over the years and, with very few exceptions, we have found this to be the case. But, what do I know? I don’t know termites, that much is certain.

So, back to our seller’s home in escrow. We had the home inspected by a big, reputable firm. Here is the series of events:

• Big Reputable Firm came back with findings of evidence of termite infestation. The report called for fumigation of the structure. Fumigation will typically run from $2500 to $3000 or more, depending on the volume of the “box” and, of course, the company.
• The seller asked for a second opinion. Every penny counts; it always does. Smaller, Company #2 came back with a finding of no evidence of active infestation, but did identify several wood members on a patio cover (wood rot) requiring replacement.
• Big Reputable Firm was called back out for a second look. This time, I joined the inspector in the attic. The “dozen or so” termite wings (evidence) that the inspector previously noted were no longer present. Were they disturbed? There is no way of knowing for sure. Now she sees them; now she doesn’t. Oh, and the wood rot isn’t really wood rot, in her opinion, but now that I’ve brought it up, it should probably be noted.

We suddenly find ourselves with several issues, issues of “he said, she said,” but they all must be disclosed to the buyer. First, we have a report saying the home has termites but no wood rot. Next, we have a report saying the home has wood rot but no termites. Keeping in mind that I am in no position to make the call, as I wouldn’t know a termite wing if it landed in my coffee cup wearing a name tag, I find myself and on the behalf of my clients in the position of having to rely on the professionals. Meanwhile, the buyer’s inclination is going to be, “We will take all of the above.”

Every day in this business I learn something new, and this was a valuable continuing education. I challenged the Big Reputable Firm, of course, and here is the explanation I got. It seems that there was evidence that the home had been previously “locally treated” for termites in one portion of the attic. Forgetting the mystery wings, given the knowledge of previous treatment in concert with the age of the structure (mid-’90s), she told me that calling for a fume was automatic. “Local treatments are substandard, I can’t guarantee the work of others, and given the circumstances, there is a reasonable likelihood that termites are present.” Suddenly, I am thinking that pest inspectors are inspecting not with eyes but with actuarial tables. And, the reality is that the $75 inspection fee does not cover their gas and time; the repair work constitutes the business, the profit margin, their french fries.

We found a middle ground, fortunately, that satisfied both the buyer and seller. Both findings had to be disclosed, but all parties (and Big Reputable Firm) agreed to spraying the entire attic versus fumigation at approximately one-third the cost. And, yes the wood rot which is (and isn’t) present is being addressed.

This discussion really only raises questions, and I am not sure I have the answers. It is a delicate dance. When more than one inspection is performed, you may overcome one issue yet raise another, and all must be disclosed. The buyer will typically want the most comprehensive solution, while the seller will want the least expensive. One thing I do know is that at the next termite inspection and at every one thereafter, I am going to be poking my head in the attic.

Ah, the glamour of real estate.

I encountered an op-ed piece this week which reminded me that it might be time to boldly venture into Boring Land. Boring Land is that place where we keep all of our contracts and disclosures, a place we visit occasionally when we receive the periodic Ask the Brokers question regarding the riveting world of transactional procedures and statutory obligations.

So, without further ado and lest your heads explode with giddy anticipation, I bring you our first installment of Better Know a Disclosure.

Disclosures are made during the residential real estate transaction to inform and to protect. These disclosures protect the buyer, in that they are presented with all material facts and considerations which might affect the decision to purchase or not, and they protect the seller, from potential future claims which might arise out of a failure to disclose. And they protect the agents for both from liability. Much like there is no guarantee that I won’t walk out the door this morning and be struck dead by an errant golf ball, the knowledge that this is possible allows me to make an informed decision and even take reasonable precautions. Fortunately for me, my home is located at least ten miles from the nearest driving range, but you can be sure I am always alert. This is because I read my…

Statewide Buyer and Seller Advisory (SBSA)

This is a ten page document that reads like a stream of consciousness. Number 18 on the hit list reads:

Buyer and Seller are advised that if the Property is located adjacent to or near a golf course there is a possibility that golf balls may damage the Property or injure persons or pets on it. Additionally, persons playing golf may enter the Property to retrieve errant golf ball or for other purposes.

So, that is what the dude with the nine iron is doing in my gazanias!

To the untrained eye, this may seem a little goofy. The reality is that each and every disclosure exists because, at some point, someone sued someone else over the issue. The fact that we have told your buyer that Fido might find a Titleist up his nose one morning does not guarantee he won’t sue both of us when this happens, but it does afford a level of protection that he won’t prevail in court.

Number 25 of the SBSA packs a bit more of a punch. Under Neighborhood, Area: Personal Factors, the buyer is advised that many things may affect their intended use and enjoyment. The list is long, but it includes things such as schools, crime, law enforcement, and “conditions and influences of significance to certain cultures and/or religions, and personal needs, requirements and preferences.”

This disclosure affords the seller and their agent protection for two main reasons. First, consider that “personal factors” are by their very nature subjective. If you ask me, “Are the schools good?” how do I know that my “good” and yours are aligned? What is “a lot” of crime? What constitutes “nice neighbors?” Second, and more importantly, I as an agent am forbidden from speaking in specifics about these things, with the obvious and biggest no-nos being related to race and religion. I could be charged with steering, with blockbusting and with Fair Housing Law violations. And I could lose my license.

In the article I alluded to, the contention was that agents get paid the big bucks yet want to relegate their duties of discovery to their clients, agents just want to sell the home at any cost (presumably so they can pocket the big commission check and themselves hit the links), and agents are lazy-lazy-lazy. The writer’s Exhibit 1 was Megan’s Law.

Megan’s Law Database Disclosure

This is the language which appears in the California Association of Realtors Residential Purchase Agreement:

Notice: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at www.meganslaw.ca.gov. Depending on an offender’s criminal history, this information will include either the addresses at which the offender resides or the community of residence and ZIP code in which he or she resides. (Neither the Seller nor Brokers are required to check this web site. If Buyer wants further information, Broker recommends that Buyer obtain information from this web site during Buyer’s inspection contingency period. Brokers do not have expertise in this area.)

This Megan’s Law site is an important one, and we disclose it as being a valuable resource to the concerned buyer. However, I can not say this emphatically enough - Sellers and their Brokers SHOULD NOT attempt to provide affirmative information regarding the presence or absence of neighborhood sex offenders. This is not lazy; it is prudent. It is prudent if I want to keep my client out of court, and it is prudent if I want to keep my license.

Now, to be clear, if I have specific knowledge of any issue which might affect the buyer’s decision to purchase, I must disclose. If my selling client has knowledge, he must disclose. And, if my client simply represents something of potential import to me in passing, I have the responsibility to share this information with a buyer. This applies to both golf balls and sex offenders, and to dozens of other issues both large and small. So why shouldn’t I save my client, buyer or seller, a little time and check out the Megan’s Law web site myself? Because of the danger that I might misrepresent.

• The Megan’s Law web site is not mine; it is designed, populated and presented by the Department of Justice. I have absolutely no way of ensuring that the information is absolutely current and 100% accurate (which it is not).

That is it. Period. A “dot” may be present on the map when in fact no sex offender resides at that location.  A “dot” may not be present when a registered sex offender does live at a location. And, I can give a real life example. We had an home in escrow several years ago. The buyer visited the web site and found that a registered sex offender was shown living one block from this home. The seller had no knowledge, and we had no knowledge, but the buyer flipped out and canceled contract, which was within their rights. Within days, the home was back in escrow with a new buyer. This time, I did have knowledge and we did disclose. The new buyer chose to be more thorough, however. They knocked on doors up one side and down the other of the street in question. The neighbors told them that the gentleman no longer lived in the home, was in fact in the hospital and would likely die. Escrow closed. Within a month, the “dot” mysteriously disappeared from the map. Should I have knocked on doors? No. It turned out the neighbors were right, the map was wrong, and the buyer was happy with their purchase. But, it might not have turned out this way at all, and my clients and I would have been telling it to the judge.

The flip side of this scenario is the one that frightens us most and keeps our attorneys up nights. What if I check the database and, finding no “dot,” give the high-five, all-clear? What if, based on my representation, the buyer answers his door to receive his first Welcome to the Neighborhood bundt cake from Charles Manson who lives two homes over in the cute single-level Craftsman?

Let’s Get Sued (Again)

Real estate agents are a lot of things. We are advisers, we are negotiators, we are marketers and market experts. And this list just scratches the surface. The list of what we are not is longer yet. We are not plumbers, roofers, hazardous materials specialists, or criminologists. We do not set school boundaries, we do not draft and approve land use plans, and we can not guarantee that what we know today will be true tomorrow or even that what we know today based on the representation of others is in fact the truth today. And we are not mind readers. I like the people in my neighborhood; you may find them infinitely unlikeable. I like my daughters’ school fine; when your child fails European History, you may have another opinion entirely.

We disclose our britches off, but there is a limitation to our knowledge and expertise in all areas that may be of import to all buyers. We have many responsibilities and obligations, all of which carry significant liability baggage for both ourselves and our clients. Risk avoidance is not lazy, its not lacking in compassion and it is not a shirking of responsibility or duty. Risk avoidance is in fact a large part of our duty to our clients. It is a harsh reality of the world we now live in.

In our next installment, we will talk about the San Diego Local Area Disclosures, beginning with all-important Number 1:

Buyer and Seller are advised that various public attractions and amusement parks may impact the traffic in the area near the Property or create noise which may be of concern to some Buyers.

I am ashamed to admit that as a part of my services, I do not perform peak hour traffic counts at nearby intersections, I do not time your commute to work, and I do not maintain sound influence charts. There are agencies, however, who do these things, and I am happy to give you their contact information. I suspect somebody has been sued over this one as well.

Ilyce Glink writing for Inman Newsshared her thoughts on the property inspection process and offered six hidden property flaws which buyers should be on the lookout for. Unless I buy you each a subscription to Inman News, I am not at liberty to share the entire article, but I will paraphrase in the name sharing.

Radon, Asbestos, Lead, Toxic Substances, Structural Engineer, and Pests were the six ugly monsters which she cited may be lurking in your future dream home. In all fairness, I don’t generally consider structural engineers problematic, but they are often in a position to identify structural issues which may be. As for the others, here is how we might be concerned in San Diego, the Land O’ Tract Housing.

Radon. This is not a huge concern in our area, but on the East Coast is routinely the subject of testing. The Natural Hazard Disclosure Report will identify whether or not your home of choice is in an area of high potential for radon gases. In Southern California, this is generally a sufficient level of discovery.

Asbestos. There is the naturally occurring kind, which is rare. Again, your Natural Hazard Disclosure Report will address this. Then, there is the other kind - the asbestos found in the materials used in the home. For newer construction, you needn’t worry. Asbestos was banned from use in new construction in 1988, and manufacturing stopped in 1984. Homes constructed prior to the mid-1980s might have traces of asbestos products, and you might want to have one of the many hazardous materials testing companies take some samples.

We have a client closing tomorrow on an older home (built in the 1960s) in La Jolla. They did opt for hazardous materials testing, and while the acoustic ceiling tiles were surprisingly asbestos free, the inspector discovered that asbestos was present in the glue used to install the vinyl floors in the bathrooms and kitchen. This information didn’t send them running for the suburbs, but it did give them valuable information before they embarked on any potentially dangerous do-it-yourselfer projects.

Lead. Lead-based paints were allowed to be manufactured through 1968, but lead-based paint products were sold into the 1970s. Again, in San Diego, where old is not old as in charming but old as in built ten years ago, this is rarely a concern. If your home was built prior to 1968, however, you should be aware that eating paint chips could be hazardous to your health.

Structural Inspectors (that is, Structural Issues).No one is immune here. If doors are not plumb, if unusually large cracks are noted in the walls, or if all of the seller’s furniture is arranged in the southeast corner of the home due to gravity, you might consider having a structural inspection.

Which brings us back to our La Jolla home. During the general property inspection, we had cause to suspect structural issues. My clients opted to have the carpeting pulled at several locations throughout the home in order to inspect the slab. It was cracked, indeed. Through further inspection by a contractor, they were able to conclude that the home was sound and that long-term settlement symptoms could be repaired. This will not always be the case, however.

Pests.In my neck of the woods, our contracts include a provision for the Wood Destroying Pests and Organisms inspection. In almost all cases, the contract will require that the seller, as a condition of the purchase, remediate any “active infestation.” While rodents are not specifically included in the “wood destroying category”, the inspector will note their presence, and the buyer will have the opportunity to request that the small, squeaky fellows be removed from the premises. Rarely in San Diego have I encountered issues with the carpenter ants and chipmunks that the author spoke of, but I suppose she was speaking to a national audience.

Our La Jolla house? Termites, wood rot, wood fungus: All present. Chipmunks? Not to our knowledge.

Don’t think that your inspection contingency gives you a free pass to cancel the deal for any reason. All houses (even newly built ones) will have some minor issues. Canceling the deal without allowing the seller to attempt to fix the problem (or reduce the purchase price) isn’t a very nice thing to do.

This is good advice, and the part about being “nice” deserves applause, but…

Ms. Glick writes to a national audience. I am a working girl in a smaller, San Diego market.  La Jolla, for me, was an anomaly. Where the average Year Built of homes I routinely deal with is “Wednesday”, the “Krissi List of Inspection Horrors” is much different.

Caulking.It’s that flexible stuff around the base of the shower pan, at the edge of the tub, and around the sinks. It begins it’s life white and intact but may become discolored or even (gasp!) missing over time. Your inspector will recommend that the entire house be recaulked (including light fixtures, door knobs and furniture which conveys). Recaulking your children as a precaution will also be advised.

Furnace Filters. These are the things that trap dust and dirt as your magic climate control machine does it’s thing. Sometimes, these filters by virtue of trapping dust and dirt will become (gasp!) dirty. Forgetting for a moment that they are $10 Home Depot items, you will threaten contract cancellation unless the seller agrees to replace them. Then, when you close escrow, you will forget to change them yourself for the next 17 years.

Damper Spacers. This is a HUGE health and safety item. Our San Diego gas-fed fireplaces are, well, gas-fed. A damper spacer will ensure that the flue is always open so that when you turn on the gas but forget to light the fire and them leave for a two-month missionary trip to Cameroon, your home won’t blow up. Forgetting for a moment that these are $5 Home Depot items, you will threaten contract cancellation and judicial action unless the seller agrees to pay a handyman $593 to install one.

Doggie Doors in the Fire Door.This is a huge problem in my neighborhood where the Homeowners Regulations require each household to sponsor at least one dog, preferably a Golden Retriever, with bonus points awarded if the dog’s name is “Max.” The door leading from your garage to your home is a Fire Door. It is called this because, when your garage is on fire, it will be also. More importantly, it will impede the spread of fire from your garage to your home (and, presumably, the other way around). When a little access hole is cut out to allow Max to freely move to and from the garage while you are at work, or in Cameroon, you have Breached the Security Perimeter. You will insist that the seller replace this compromised door with a new door. After closing, you will remove the auto-closing mechanism from same so that it will remain open all day long, allowing your own pet (Max) freedom of movement. Not to mention, you will get a really nice cross-breeze.

GFCIs. Ground Fault Connector Interrupts are those special little electrical outlets with the red “reset” button which you push every time you attempt to simultaneously blow dry your hair, recharge your golf cart, and cook a turkey. They prevent bad things from happening if a power surge should occur. At your inspection, you will discovered that at least 40 of these are faulty. Forgetting for a moment that these are $15 Home Depot items, you will threaten contract cancellation unless the seller hires a Licensed Electrician to replace them at a total cost of $3,741. 87. You will offer to accept a credit in lieu of repairs. The credit you will ask for will be $3 million dollars, the seller’s Hummel collection, and a pony.

Of course, based on your inspector’s findings, you could cancel without giving the seller the opportunity to address these heinous deficiencies, but that wouldn’t be very nice.

It was 9:00 AM on a Saturday. The setting was idyllic, an ordinary residential street in an ordinary suburban neighborhood. Later, when the story of the day was retold, those who survived the ordeal would recognize that this day’s overcast skies and the threat of rain were in fact omens of the impending ugliness. Yet, on this morning, the unsuspecting families in this otherwise orderly community had not fully shaken the comforting bathrobe of a peaceful night’s slumber and were blissfully unaware of what was to come.

And come, they did. The insurgent troops appeared seemingly out of nowhere, the tanks and Hummers and traditional vehicles of aggression replaced by their modern-day counterparts: Lexuses (Lexi?), BMWs, and one lone pick-up truck. The soldiers converged, but stealth was not necessary this day. This would be a battle of hand-to-hand combat. And, as in most contests for sovereignty, their would be no victors.

“Good morning. I am Earl from What Were You Thinking? Property Inspections. Let’s take a look at this deathtrap, shall we?”

Over the course of the next three days, I will have the honor of attending three property inspections. The homes under assault will range from the 45-year-old property to the 10-year-new. I can guarantee that the reports for each will be indistinguishable save the buyer name on the attached personal check.

Inspection reports and inspectors are funny this way. The foundation slab split entirely in two with evidence of past civilizations wedged in the gap and the tub which might benefit from a little recaulking will be presented as having the same Defcon level of urgency. Tricky things are inspections. The inspector is charged with finding fault, the buyer and their agent are charged with sorting through the list of horrors to differentiate the truly important deal-breaking items from the ordinary, cosmetic, wear-and-tear issues, and the seller is almost always left feeling offended and defensive.

It is all negotiable, of course, but negotiations directly between principals most often regress to conversations involving hot glue guns, potato peelers, pinking shears and other commonly found and readily available weapons of everyday home life. This is why it is essential that the real estate agent accompany clients to the property inspection. Left unattended, the agents would only return later to find the buyers and sellers beating the crap out of each other with rusty lead-based paint cans and Fiesta Ware to determine who will be paying to have the back door rescreened. 

Now, as I gear up for the first of my inspections this morning and prepare to don my big girl Realtor uniform and pile into my shamefully under-armored VW Bug-Mobile, I take a moment to glance around my own homestead and wonder, “What if I were the target today?” At my home, where there is no ruling government, where anarchy reigns and where the rebel factions (15 and 17 year’s old respectively) have methodically set about destroying the very society in which they must coexist for the foreseeable future, the final inspection report summary would probably look something like this:

House utterly sucks. For the love of man, run!

My home just had only its seventh birthday, but where inspections are concerned, this is immaterial.

• Bathroom #2 - Fossilized arachnids in shower stall pose health risks. (They are pets, stupid. They have been there so long, I have named them.) Toilet flushing mechanism needs replacing. (Does not! Just lift the tank cover and pull on the chain attached to the little floaty-thing.)
• Kitchen - Chips in granite counter tops noted. (Yes, I know. After years of repeatedly whacking the corner with empty wine bottles as I whisk them off to the recycling bin, that is considered ”normal wear and tear”. At least I recycle!) Kitchen faucet leaks. (Only when you turn it on REALLY BIG.) Microwave makes unusual noise when operated. (Does the coffee get hot or not? I would submit, yes.) Oven, when heated to 350 degrees, registers only 342 degrees. Recommend service. (We have a, what did you call it, oven?)
• Presence of pets suggested by stains on floor covering over there (five-spice chicken), there (squirrel parts), and there (we prefer not to speculate). Recommend cleaning carpets if sensitive to dander. (Hey, buddy! Don’t touch that dog hair! I am saving up to make a new dog some day.)
• Laundry - Accumulated lint in dryer vent poses fire risk. (Where is this laundry room of which you speak?)
• Garage - Many areas inaccessible and not inspected. (Items to convey: Two Barbie Dream Houses, three bikes with flat tires, one “All About Me” poster from Mr. Ferguson’s 1995 Kindergarten class, and assorted rollerblades which only fit Gary Coleman. Items not to convey: Gary Coleman.)
• Exterior - Areas of dead or dying landscaping noted. Recommend testing/adjusting irrigation. (Recommend not owning a 95 pound male dog who eats five-spice chicken, furry rodents, and a largish rock on at least one known occasion, and squats like a girl.)
• Bathroom #3 (children’s bath) - Water damage to drywall noted next to tub/shower enclosure. (Duh. At least they bathe.) Plumbing at sinks could not be inspected due to under-cabinet storage. (And, where would you like them to store their empty hair-product bottles, the entire line of Tammy Faye Bakker Make Me Pretty products, and Tiger Beat magazines and returned homework assignments dating back to the British Invasion? Wait a minute - So that’s where my Cuisinart went!)

I could go on, but I’m already depressed. I am off to invade someone else’s previously safe-haven. Time to go to war.