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Friday, April 28, 2006

Disclosure Loopholes Highlighted

The Tacoma News-Tribune sheds light on a problem with state law that could become more of an issue as foreclosures become more common in the coming years.

"Opportunity knocks!" proclaimed a real estate handbill about a five-bedroom home on two acres selling for $288,750.

But here is what you won't find on the advertisement for the property on Canyon Road East: State and local government agencies suspect the site, once an illegal landfill, is contaminated with corrosive wastes, solvents and dangerous metals, among other hazardous substances.

The owner — a lender that foreclosed on the property — doesn't have to disclose that to prospective buyers under an exemption in state law. Yet under state and federal law, anyone who buys the land could be obligated to clean it up.
In a hot real estate market, buyers might be tempted to waive residential real estate disclosure requirements.

Don't do it.
Duh. I have to say I still don't understand how people could get so worked up about getting a house that they would totally waive inspection. We're talking about the biggest and most important purchase many people will make in their lifetimes, and at the height of the mania last year and in '04, people were walking into it completely blind. Thankfully as foreclosures ramp up, the mania ramps down, so regardless of state law, the problem will be self-correcting.

(Susan Gordon, Tacoma News Tribune, 04.26.2006 )


Alan said...

On the topic of inspections, what do people recommend for new construction? I am having a new spec house built by a relatively small builder (few hundred per year) and my agent is recommending an inspection when the house is 90-95% complete. I've read others recommend 3-4 phased inspections throughout the construction process. Is this really worthwhile for a spec home?


Eric D. said...

Get as many inspections out of them as you can. You are probably getting no real warranty if you are buying a spec home from a small builder. So get as many inspections as you can otherwise they could decide to cut corners as soon as they know you won't be inspecting anymore.

Alan said...

Thanks Eric. The builder is providing a 2/10 year warranty through America's Choice and will let me bring my own inspector but isn't paying for any inspections. So my question is if I'm spending several hundred dollars for an inspection at 90-95% completion, is it generally worth another several hundred dollars to pay for one or two additional inspections earlier in the construction process?

Anonymous said...

If you can't afford even a few thousand dollars in inspection costs, you have no business building a house.

Think of it this way: you're paying a few thousand to secure the quality of an investment of a few hundred thousand. Don't you think that makes sense?