Why do real estate agents do a visual inspection of the properties they sell?

What is the agent visual inspection, or AVID, and why is it required with home sales in California?

The short answer on the purpose of the AVID

When real estate sales people represent buyers and sellers on residential real estate transactions in CA, they must do a visual inspection of the property as part of their disclosure obligations. In other words, they are required to walk through the property, inside and out, and look carefully at what they sell and advise the parties to the contract of any red flags noticed.

This is required by the state. It is not optional.

If an attentive Realtor walks through and notes something that would make a buyer unhappy to discover after close of escrow, that agent needs to note it on the required form so that any such concerns are disclosed to the home buyer(s).

Video discussing the AVID, or Agent Visual Inspection Disclosure

 

Where do the agents write up their visual inspection disclosure comments?

 

Agent Visual Inspection Disclosure, top of page 1

Agent Visual Inspection Disclosure, top of page 1

 

Sometimes the real estate licensees will simply make a few comments on page 3 of the Transfer Disclosure Statement (TDS).  More and more, though, they are completing the separate 3 page AVID (Agent Visual Inspection Disclosure) form instead.  It is larger and allows for more thorough list of items noted. Both approaches are permitted by law to fulfill that obligation, though.

 

Why is the AVID required?

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What does work finaled mean?

When completing or reading home sale disclosures, you may see something about “work finaled”. What does that mean? It’s simply asking if the county, city, or town inspector came to the property to sign off or final completed work. This happens after the home owner has paid for permits, had the work completed, and then scheduled the government inspection. The contractor may also arrange for this final inspection.

Work finaled in disclosure forms

This phrase will be seen in the PRDS Supplemental Sellers Checklist. That query will come right after one asking if permits were obtained.  The reason that they are together is that “work finaled” means was the permit work finaled by the town, city or county inspector.

Form asking if there is work finaled

In short: if a seller did not get permits, the seller did not get the work finaled.

Often I find that this gets mixed up. Sellers divulge that they did not get permits, and then say that the work was finaled.

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Building Permits Are Online and Easy to View in San Jose

Building permits search page at SJPermits.org - click to go to that siteBuilding permits are not hard to research online in San Jose.

Why would you want to check building permits?

Whether you are checking on your own home to make sure the records for the building permits and finals are accurate or if you are considering a property to buy that has had renovations, it’s a good idea to check the permits if possible. (You might also be surprised at what need a permit, such as replacing a water heater or a furnace.)

Most towns and cities now make building permit files available to view online and at no cost. (Exceptions that I know about are the county and the City of Monte Sereno.) That doesn’t mean you’ll necessarily be able to understand everything in the file or that what’s online is complete. But it is a help!

Here’s the link for the city of San Jose’s site SJPermits.org, which takes you to https://sjpermits.org/permits/online-permits.html

That said, navigating through the site will take time. In my experience, when I locate a property with multiple records, which is typical, I’ll click through to view a PDF or image of the permit. When done, I usually end up having to do the majority of the search over. It’s a lot of clicking through. It’s not hard, but it’s not efficient, either.

Online permits may be viewed in many other Silicon Valley areas too. Just do a web search for your city or town!

Related reading

How important are permits and finals?

Los Gatos: View permits online (Live in Los Gatos blog)

Monte Sereno building permit nightmare (from 2009, Live in Los Gatos blog, a warning story to always keep copies of all of your home’s permits!)

NEW California Disclosure – Home Fire Hardening Disclosure and Advisory

Fire Hardening and Defensible Space Advisory Disclosure and AddendumJust about every year California amends what sellers are required to disclose, and one change that I think we’ll be seeing a lot of is about home fire hardening. Many agents, including myself, will begin to use the fire hardening disclosure / document (which has already changed once in six months). The current one, as of June 2021, is the C.A.R. Form FHDS, 5/21 Fire Hardening and Defensible Space Advisory, Disclosure, and Addendum.

So what is in this document, who will have to use it, and how can it help buyers and current home owners?

The CAR Fire Hardening and Defensible Space form is a two page document completed by the seller of a residential non-commercial property to notify the buyer of fire hazard zoning, code compliance, and possible vulnerabilities and/or defensible features. Both the buyer(s) and seller(s) sign to acknowledge receipt and consent to comply with the appropriate terms in paragraph 4B.

Who Will Use This Form? Paragraphs 1 and 2: Prerequisites

This disclosure is required for homes (1-4 unit residential properties) in high or very high fire hazard severity zones when the seller must complete a Transfer Disclosure Statement (TDS form). Sellers for California real estate transactions falling within those criteria are obligated to provide specific information contained in this form to the buyer. If these properties were improved or were built before January 1, 2010 there are additional stipulations. However, use is not restricted to properties in these zones.

Owners of residences where the zone is unknown, or those outside of the designated fire hazard zones which are “in, upon, or adjoining a mountainous area, forest-covered land, brush-covered land, grass-covered land, or land that is covered with flammable material,” (Gov’t Code 51182 and 1C in CAR FHDS 5/21 – basically, homes in or near ample kindling) should also make these disclosures if they might be considered materially important. Even when it’s not legally necessary, any homeowner might voluntarily disclose using sections of this form. To show that a home is not in a designated high or very high fire hazard severity zone, sellers simply check the box indicating so in paragraph 2B.

Is the address in a high or very high fire hazard severity zone?

Not all homeowners know if their property is in one of these zones, but it’s the seller’s responsibility to find out! In paragraph 1B the form suggests that a natural hazard zone disclosure company could determine this information (and if you’re selling you may have already ordered a report that would contain those details), but it certainly isn’t the only resource.

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Silicon Valley Homebuyer Tip: Check the Property History of the House You Like

Insights from Prior SalesWhat is the benefit to a home buyer in knowing that the home sold recently? There are really two advantages: first, if it’s a normal sale (not distress), you can get an idea of the sellers’ equity.  If it was a short sale or bank owned property, you may learn that it is a “flipped” house – and that would bear some extra investigating (did they get permits, did they do the important items which you cannot see, etc.).  More importantly, though, if the current owners bought the home not too long ago, you may be able to read the prior inspections and disclosures.

Sometimes sellers – and sometimes even their real estate agents – are reluctant to admit that they saved this type of information. But if they hired the same  Realtor who assisted them in purchasing this property (also reported on the MLS), that agent would have access to all of the disclosures and reports. California state law demands that brokers save all transaction records for three years. Homeowners and their agents usually save them for many more years than that, though. (Sometimes agents move brokerages and this can make it more challenging to get full and complete records.)

So back to the issue of buying a property that sold not too long ago. Let’s say you have found a nice bit of real estate in San Jose (a house, condo, townhouse) which you want to buy, and perhaps there are recent improvements, updating or remodeling, “permits unknown“.  The best way to get clarity on the situation is to then ask for the prior disclosures, inspections and reports. It is imperative to get everything because clues may turn up in any of these documents. Often the current owner will not recall the story if the work was done by prior owners, and will not think to check the original paperwork. But by reading through it, you may learn what the status really is – whether there are permits and finals or not, for instance.

Particularly when buying a home that sold in recent years, you can leverage your knowledge to improve your ability to purchase wisely.

Please call or email me if you’d like to discuss buying (or selling) a home in Los Gatos, Campbell, Saratoga, Cambrian Park, Almaden Valley, or anywhere in San Jose – Santa Clara County.

Does it matter whether your real estate purchase offer is on a PRDS or CAR contract?

Real estate contracts welcomeIf you are home buying or selling in Silicon Valley, the odds are good that your area is one where the contracts and forms could be either the PRDS set or the CAR set.  Does it matter which one is used?

Weary home buyers who’ve written multiple offers on one set of forms would really prefer to not switch and suddenly need to learn a new set of terms, risks, and benefits that come with each.  The majority of Realtors representing sellers, who are listing agents, will accept offers on either one.  Not all will, though, so it’s important for the buyer’s agent to read the MLS instructions and to communicate with the listing agent ahead of time to make sure.

There are many differences between the PRDS and CAR real estate contracts.  The biggest one is that the PRDS contract by default requires that the property be delivered to the buyer in a certain conditon (unless the As Is box is checked) while the CAR contract is by default an As Is agreement. But there are many other issues too.

These contracts also reference other forms from their same set of documents which will be important to the sale.  For instance, the CAR contract requires that the seller fill out a particular disclosure form along with the Transfer Disclosure Statement:

10 A (4)  Within the time specified in paragraph 14A, (i) Seller, unless exempt from the obligation to provide a TDS, shall, complete
and provide Buyer with a Seller Property Questionnaire (C.A.R. Form SPQ)

The PRDS contract, by contrast, requires the PRDS Supplemental Seller’s Checklist.  They are not interchangeable unless all parties agree in writing to the substitution.

If a seller’s disclosures are all on PRDS forms, it’s easy to infer that the seller or listing agent prefers offers on the PRDS contract OR that adjustments may need to be made to keep the seller from having to fill out yet another form after completing the presale disclosure package. Otherwise, giving a CAR offer on a listing where PRDS disclosure forms have been used puts an obligation on the seller to complete another new disclosure.  At best, this may generate a counter offer from the seller. If your offer is neck and neck with another, this could potentially harm your negotiating position in a multiple offer situation.

 

Related reading – older articles (the forms have changed a little since these were written):

Did You Know that You Have a Choice in Which Forms Are Used to Buy & Sell Homes in Silicon Valley? (2009, this blog)

What is the difference between the CAR and PRDS purchase agreements? Does it matter which contract is used? (2011, this blog)

 

Market activity in Santa Clara County:

 

 

 

Increasing demands by some listing agents on what is to be included with purchase offers

Offer checklist for some listing agents in Silicon Valley

For a long time, Silicon Valley real estate agents have expected home buyers to be preapproved, not just prequalified, for a mortgage or loan when they submit an offer to buy a property.  So the offer package would consist of an agency disclosure, the contract (PRDS or CAR), and a preapproval letter from the home buyer’s lender.  (Some listing agents require the buyer to be preapproved with the listing agent’s lender. This is especially true with REOs.)

Over time, a few disclosures got signed to go with the submission, too – such as one on the dangers of writing non-contingent offers, another on brokers potentially submitting offers for competing buyers, etc.

When the market gets overheated, as it is now, listing agents begin to require even more things upfront, with the offer – not after it’s been accepted.   In many cases, listing agents want all disclosures signed upfront, plus the covers of any inspections.  This often means initialing and signing 60+ pages.

Cash offers traditionally come with “proof of funds”.  That means bank statements or eTrade or other statements proving that you’ve got the money.  Sometimes it’s a portfolio showing how much stock one owns. (Last week I got 22 offers on a listing and one agent, who”s been in the business for decades, showed me his preapproval letter when I asked for the proof of funds. He didn’t understand.) Naturally, we black out or white out or otherwise obfuscate the account numbers for safety’s sake.  In recent years, though, the strongest offers come with proof of funds no matter the size of the down payment.  Many Realtors in the San Jose, Los Gatos, and Saratoga areas expect it.

Buyer’s agent: do your visual inspection upfront, too….

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Digging deeper with disclosures

Often the extensive Silicon Valley disclosure paperwork answers most questions that a home buyer has, but sometimes not 100%. Here are a couple of thoughts for getting a little more information regarding disclosures on the property and area.

 

 

 

 

Home buying in California? Ask a lot of questions!

seagull in stained glassIf you are purchasing a home in California, it would be wise to ask a lot of questions.  You may wonder why, given the absolutely enormous stack of disclosures that sellers must fill out already.  Is it possible that anything at all could be left out?  You bet.

First, a lot of the disclosures are a little bit limited in one way or another.  More than anything, often they are a subjective assessment by property owners who may not feel the same way about something as you do.  For instance, what constitutes a nuisance or something annoying?  Perhaps they love the sight of seagulls (seagulls are overly abundant in San Jose right now) circling over head, but maybe you view them as flying poop monsters, whose droppings will ruin the paint on your prized automobile.  Are they a nuisance? Or do they enhance the sense of closeness with nature?

Another limitation is with some of the questions themselves.  The number of questions and the way they are worded have changed over time in response to problems which arose from lack of clarity.  In the 90s, one of the questions in the PRDS Supplemental Seller’s Checklist asked if there was any landfill on the property.  After a lawsuit involving medical waste in a Willow Glen (San Jose) backyard, the word was changed to just “fill” (sans “land”) to cover a broader meaning.

In some cases, the meaning is still narrow.  For instance, you may want to know if anyone has ever died at the house.  The disclosure forms, though, only ask if anyone has died there in the last 3 years.  If you don’t ask, the seller doesn’t have to volunteer about a death prior to that (some exceptions).  If this would be a concern to you, then, you will have to ask – and the home owner is required to answer truthfully. (more…)

Silicon Valley Home Buying Tip

Newer Silicon Valley Home in Blossom Valley

Are you house-hunting in Silicon Valley? If so, you may be viewing homes which were last sold just a few years ago. This is especially true among distressed properties which were purchased, renovated and now are being flipped (foreclosures, REOs, short sales). Most sales are reported on the multiple listing service, so it’s easy for your agent to find this information for you. If there’s nothing on the MLS, a quick look at the county records online will reveal the last sale date.

Why does it matter if the home sold just a couple of years ago? Because it may be possible, when you are buying such a property, to request the old inspections and disclosures. If the current sellers are using the same agent who helped them to buy the home (which is also learnable from the MLS), he or she should have a copy of the old file. State law requires that brokers keep transaction records for 3 years. Sellers and agents tend to keep them for longer, though. (When agents change brokerages, though, sometimes it’s harder to get ahold of old files.)

So back to your Silicon Valley real estate issue. You’ve located a home that you would like to buy, and there has been some recent remodeling done, “permits unknown”. By requesting the old inspections, reports, and disclosures, you may learn the true status of that repair work. Perhaps the current owner doesn’t remember, and doesn’t think to look at the old paperwork, but by going through it yourself, you may gain a clearer understanding of the nature of those improvements. Or you may find out that an addition or remodel was done without permits.

Knowledge is power, and by requesting the information on a home where it was sold in recent history, you gain some of each.