Sunday, February 17, 2013

The Real Estate Condition Report- Don't Buy Home Without One!

For over 20 years, Chapter 709 of the Wisconsin Statutes has required most sellers of residential real estate to provide a Real Estate Condition Report to prospective buyers.  Sellers are required to certify whether or not they are aware of defects in numerous areas of the property being sold, including the roof; the electrical system; the plumbing system; the HVAC system; the septic system; the well; and the basement.  They are also required to certify whether or not they are aware of other conditions affecting the property such as boundary line disputes; unsafe levels of radon or mold; and remodeling that was completed without the required permits.  Sellers are in the best position to provide this information to buyers because they have usually lived in the property for several years.  In comparison, home inspectors are only allowed to access the property for an hour or two and are usually not allowed to move the sellers' personal property, much less wall and floor coverings.

In the ideal scenario, a buyer receives a Real Estate Condition Report signed by someone who has owned and lived in the property for several years prior to making an offer.  Unfortunately, I often deal with the following less-than ideal scenarios:

  • The buyer does not receive the Real Estate Condition Report until after he or she has already agreed to purchase the property.  
  • The buyer receives a Real Estate Condition Report signed by someone who does not own the property and will not receive any of the proceeds from the sale.
  • The buyer receives a Real Estate Condition Report signed by an absentee owner likely ignorant of the property's true condition.
  • The property has never been inhabited by anyone, i.e., a spec home.
  • The sellers who owned and lived in the property for several years convey the property to a relocation company that completes the Real Estate Condition Report and sells the property (yes, that really happens!).
You might be able to get a great deal on a foreclosed property, a spec home, or a home being sold by the personal representative of an estate. However, that deal won't seem so "great" anymore when you learn that roofers and basement repair contractors don't provide 5-year payment plans.  You will have to commit to paying a bank hundreds of thousands of dollars over the next thirty years in order to buy a home, so the true condition of this home should be absolutely critical to your decision.  Do yourself a favor and insist on receiving a Real Estate Condition Report signed personally by all owners of the property and all persons familiar with the property's condition before you make your offer!