Huntsville Alabama Houses Blog

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Caveat Emptor - Buyer Beware

Alabama is one of fifteen remaining "caveat emptor" states in regards to the sale and purchase of real estate. "caveat emptor" is a latin phrase that translates to "let the buyer beware".

In terms of real estate this simply means the seller is under no obligation to disclose in writing certain existing or prior defects in the home. In a caveat emptor state, such as Alabama, the buyer is responsible for discovering defects, usually through hiring a professional inspector.

There are two types of defects: patent and latent. Patent defects are defects that are obvious. Latent defects are hidden defects. Examples of patent defects are torn carpets, loose door knobs, broken windows, and anything else easily visible. Examples of latent defects are termite damage, fire damage in the attic, faulty electrical wiring, and anything else not clearly visible.

Many sellers attempt to take advantage of this law by not disclosing defects to potential buyers. However, Alabama law requires sellers to inform potential buyers of any latent defects they are aware of. So, even though Alabama is a "buyer beware" state, this does not absolve a seller or his agent from disclosing any and all defects they are aware of. The law simply means a seller doesn't have to disclose defects through a "seller's disclosure".

In states that aren't caveat emptor, sellers are required by law to fill out a form disclosing all defects, existing and previously repaired. Unfortunately, Alabama does not require this, and as a result, Alabama experiences significantly more real estate related lawsuits than most other states.

While the seller is not obligated to put the defects in writing, he is not allowed to attempt to hide them or lie about them either. Misrepresentation is knowingly representing one thing when you know another to be the truth. As a seller, if you do not disclose a defect with your home, it could come back to haunt you. If the judge rules you knew about the defect but neglected to let the buyer know, the punitive damages can be significant since misrepresentation is simply illegal.

As a buyer, be diligent. Hire a professional to discover problems. Ask your agent to find out what defects the owner knows about. If you have any concerns about what has been previously repaired, ask your agent to find out.

As a seller, be honest. Most sellers have a tendency to think if they disclose a problem, a buyer will be scared away. This simply isn't the truth. What I've learned is being honest up front BEFORE the buyer asks actually wins the trust of the buyer and sways them in your direction. Personally, I've sold two of my own homes with defects here in Alabama. One of them had a major latent defect. In both cases I disclosed the issues with the potential buyer up front, and in both cases those buyers bought the home anyway...at full asking price. Oh, and yes, I did hire a professional to repair the defect before closing.

Remember, DO THE RIGHT THING!

Todd

Buying or Selling a Home Under a Lease

Before I get started, I would like to state I am not an attorney. However, as a real estate agent I simply must learn general knowledge about the law in order to effectively advise or warn my clients of potential legal issues involved with the sale or purchase of a home. For proper legal advice, please consult your attorney.

As the rental market gets hotter and hotter, I am receiving more and more calls from renters and potential renters. Yesterday was one of those days. I received a phone call from a concerned tenant because her landlord had put the home up for sale. Her question...Is it legal?

This isn't an uncommon question. I get one or two calls a month from renters curious as to their rights. I also get calls from landlords asking what their rights are.

As a homeowner, you have the right to sell your home at any time, regardless of who's living in it. On the flip side, as a renter, you have to right to stay in the home according to the terms of the lease.

I want to address the full situation as the renter explained to me. The landlord put the home up for sale and is asking the tenant to sign an agreement stating they will move out of the home within 10 days of closing should the landlord get a contract on the home. This document, if signed by the tenant would amend the original lease agreement signed for one year in August, and the tenant would be bound by the new document.

A lease agreement is a contract and is binding. The tenant has no obligation to move out because of the sale of a home even if the new owner asks them to leave. The lease agreement simply assigns the right to live in the home to the tenant, and since it was signed before the sale of the home, it supersedes other contracts including a sales contract.

As a landlord selling the home, your best option is the have the tenant agree in writing to move out. It's a lot easier to sell a home when there are no encumbrances and a lease is an encumbrance. Simply put, the easiest way to do this is through some form consideration, usually cash. I have found offering cash or offering to pay the deposit on another rental is a gesture of good will and is generally welcomed. Trust me...you'll have far less problems by offering cash as opposed to force.

The last thing you want to do is anger a tenant by trying to force them out, only to find they caused thousands of dollars of damage to your home just before closing in an act of vengeance. Sure, you could sue them and recover your costs, but you still have to do the repairs before you close on the home. The legal system moves MUCH slower than a real estate transaction does. It may be some time before you can recover that money.

If you are a purchaser buying a home under a lease, your best option is to see if the seller can work something out with the tenant to have them move out. Your next best option is to close on the home and then offer cash to the tenant to have them move out. Of course, make sure everything is in writing and signed by both parties!

If you are a tenant under these circumstances, don't be afraid to ask for cash. You have a signed contract (usually for a year) and that contract is binding. If you are following the terms of the contract (paying rent and paying on time, taking care of the home, etc), the owner can't force you out. If the landlord does agree to pay you cash to move out, once again, make sure it is in writing and signed by both parties.

I advise you to be reasonable. If they offer you cash, accept it, sign, and move on. Don't get vindictive...don't destroy the home. There are benefits and drawbacks to being a homeowner and being a tenant. That's just part of the game.

For all parties involved, keep it civil and respectful. Regardless of where you stand in the transaction, you'll feel like a better person for doing so.

Todd

Federal Reserve To Provide Halloween Relief

Halloween is a time for scary stories and haunted houses. Halloween came early for the housing and lending market this year, with numerous scary stories about the housing market haunted by declining home sales and property values.

Who knows? Maybe the Fed thinks we've had too much of a scare recently and is anticipating cutting interest rates on Halloween. While I doubt the Fed is superstitious and cutting rates just because of Halloween, they are expected to cut rates on October 31 in an effort to spur sales of new and existing homes, and slow down the number of foreclosures coming down the pipe. Either way, a rate cut means lower monthly payments for those with adjustable rate mortgages and lower payments for those seeking to buy a home. Now, that's not so scary, is it?

Todd

Win $1000

My web host has recently announced a monthly sweepstakes where you can win $1000 simply by registering. I've added a link to my page at http://www.huntsvillealabamahouses.com/Win$1000 for your convenience. Simply register and wait! Who knows, you may get lucky!

Todd

What started out as a blog entry quickly became a detailed report on what you can do to sell your home in a down market. There is so much useful information in the document, I've added it to my web page. You can find it here... www.lessmesshess.com/sold.

Happy reading!

Todd

Deals! Deals! Deals!

It's a buyer's market right now. Homes are staying on the market for longer periods of time than they did a year ago. What does this mean for you, the savvy buyer? You can save thousands of dollars!

Willing to offer more perks to attract qualified buyers, sellers are now more flexible with their price. When I say "qualified", I mean they want that pre-approval letter before they will consider your offer.

Unfortunately, most potential buyers aren't in the market right now, even if they have good credit. Most are taking a "wait and see" approach, largely due to fears over the recent lender woes. Frankly, if you are taking this approach you are selling yourself short, and you could be missing out on some great deals.

Home builders are offering some wonderful deals and perks to qualified buyers. Traditionally, builders preferred not to use a real estate agent other than their own agents to attract buyers. In a complete reversal of former practices, many builders are offering perks to agents and their buyers, often translating to thousands of dollars in savings and closing costs.

So, what are you waiting for? This market is yours and your dream home is much easier to find today than it was last year. If you would like more information or a list of homes, please email me. Thinking about a new home? I'll contact local builders for you and negotiate some good deals and perks for you!

W. Todd Hess