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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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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