Buyers ready to take post-sale action after appraiser discovers key discrepancies
Oct 16, 2023Question: We moved into our first home. The purchase was fast. It was a multiple-offer scenario. We tried to buy a Bay Area home with a loan contingency. That strategy failed. So our parents pooled resources. As a result, we were able to compete. We paid all cash. No contingencies. We closed the sale in seven days. It was an easy process.
In hindsight, we made a big mistake. We are refinancing. The plan was to pay our parents 50% of the purchase money back in 2023. The remaining balance would be due in 2030. Now we have issues. The appraiser measured the property. It is 1,498 square feet. The appraiser also claims our new home is legally a three-bedroom house — not the advertised four-bedroom, 1,650-square-foot home that we thought it was. My father looked at the disclosures. There is nothing that would show a discrepancy for would-be homebuyers.
The day after this discovery, we were angry. Today, we are ready to pursue a legal remedy. Where do homebuyers in our position begin?
Answer: “Square foot cases” is the term of art. It is how real estate attorneys put their children through college. Take this action:
- Contact a real estate attorney. That is an attorney with a practice based 80% or more under the real estate umbrella.
- Create a timeline. Fill in the timeline with all communications about the property and its purchase.
- Get it to the attorney ASAP.
It will ensure the first meeting with a real estate attorney is productive.
Real estate attorneys remind us that agents and consumers rely on tax assessor records. Full stop. Property assessments are for tax purposes. Competing departments are for construction issues. In all fairness, the multiple listing service (MLS) uses county assessor data, auto-populates square footage, bedroom count and the number of bathrooms. It is up to “others” to override the MLS input forms.
In real estate transactions, we all must conduct due diligence. Finalized building permits tell a story. Investigative work is in order. Permits are the first clue. I’ll share some overarching concepts for all of us to avoid pre- and post-sale square-foot disputes.
Home seller:
- Professional assessment
- Transparency in the listing
- Maintain good records
- Open communication
- Encourage buyer verification
Seller’s agent:
- Educate your seller
- Review property documents
- Transparent listing practices
- Communication is key
- Stay updated
Homebuyer:
- Independent verification
- Due diligence in research
- Ask questions
- Negotiate based on findings
- Document everything
Buyer’s agent:
- Advocate for accuracy
- Research and verification
- Open dialogue with the seller’s agent
- Educate the buyer
- Document all findings
Formatting the findings, discrepancies, disclaimer and advisories is easy. Use the PRDS Real Estate Broker Square Footage & Lot Size Advisory and Disclosure (PRDS Form SFLA) on the San Francisco Peninsula and western areas of the Santa Clara Valley, aka Silicon Valley. In the rest of the Bay Area and beyond, use the California Association of Realtors’ Square Footage and Lot Size Disclosure and Advisory (C.A.R. Form SFLS). Those two forms act as roadmaps. If followed in an astute manner, no one will get lost in litigation.
Questions? Or are you or someone you know navigating life’s transitions? Let lauded negotiator Pat Kapowich make your next move easy. Visit Kapowich’s website for free area housing data, insights and trends. Or put his artful blend of specialized credentials, decades of experience and endorsed skill set to work for you. Kapowich instills confidence when buying, selling, relocating or resizing homes. Do not just make a move — make the best move. Contact him today, Realtor Pat Kapowich, a career-long consumer-protection advocate.
Office: 408-245-7700; SiliconValleyBroker.com
[email protected] Broker# 00979413
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