I've been a big fan of mini-splits for air-conditioning small spaces for a while now. While the interior units can be fairly ugly, there are alternatives -- ceiling cassettes, and in the case of at least one manufacturer, units that look a little like a picture that hangs on the wall, complete with the ability to provide your own artwork that can be slid into the frame. They are extremely quiet (both the interior and exterior units) and seem to sip electricity as well. So, all good!

Well, until it isn't! I purchased a unit online about 5 years ago for a small rental property. The equipment was purchased online and installed by a licensed HVAC professional. Per the manufacturer's warranty, as long as the system is installed by a licensed HVAC professional the warranty is valid. The warranty is 5 years from date of install, and the compressor is warranted for another 2 years (or 10 years from date of install if installed by a factory-trained technician). Note that some factory warranties on these systems specifically exclude systems purchased online.

After about 5 years of very light use, the system quit functioning and displayed an error code. The manufacturer has multiple websites, and it took me awhile to find the website that had authorized factory technicians available in my area. To get to this point, I had multiple chat sessions with reps from the factory, who eventually would tell me that they couldn't assist me, as their group only handled window/wall AC units (this was after telling them that it was a mini-split, along with the model #'s and serial #'s of the units) -- so a very frustrating experience. Likewise, after re-registering my system, the webpage asked if I needed service. Clicking on the "Yes" button provided a multitude of products that they manufacture, with the exception of mini splits, which seem to not be on their radar whatsoever, in spite of them being a major brand/manufacturer of this type of product. Again, more frustration. 

So, the "factory-trained" technician came out that afternoon. Nice guy, but clearly, he had never worked on this model of system, continually calling it an "older system" (it was 5 years old). He pulled on the cover of the interior unit so hard that I was sure that he would break some of the brittle plastic components (and as it turned out -- he did break a few pieces, and just stuffed them back inside of the non-working unit, hoping that I wouldn't notice. He did offer to sell me a new system, of course!). 

Eventually, I was able to procure an appointment with another "factory-trained" technician, but he was about 3 weeks out. I procured a small space heater for my Tenant in the interim, but this was the only factory-trained technician available at all, so we waited. When the day arrived, they did some troubleshooting on the system, which resulted in the diagnosis of a malfunctioning printed circuit board (basically the CPU for the system). I was expecting it to be fairly expensive ($300-$500) but less expensive than a new system -- and of course they would have to replace the damaged plastic components/gears damaged by the previous technician. The service call was $285, but at least I had an answer -- well, kind of. Apparently, they don't manufacture that printed circuit board any longer, and it's not available. So much for a 10-year warranty if one can't get parts!

In the interim, I continued a dialogue with the manufacturer, who eventually indicated that my case had been sent to the "Presidential Liaison Group" (sounds impressive!) and that I should hear from them within 5-7 days. 2 weeks later I let them know that I still hadn't heard from the President's people, but after that prodding I heard from them shortly thereafter. Of course, I had to resubmit all of the info that I had submitted prior (receipts, model #'s, serial #'s, etc.). But all good, as I was now in the capable hands of the President's own personal customer service team! This turned out to be the equivalent of the world's slowest chat session. They would ask for something, or ask a question, and I would respond immediately. Several days later, that would ask for something else, and I would respond. Rinse and repeat for a couple of weeks. Eventually they told me that I would be getting a store credit for essentially the amount that I had originally spent on their system -- fair enough, except their online store doesn't sell mini-splits (of course!). But I could use a through-the-wall AC unit for another rental, so all was not lost.

The next thing that I had to provide to receive the credit was the model # and serial # stickers from the units, cut in half (or at least photos of them cut in half). They were in difficult to reach places, and it required a hairdryer or heat gun to soften them enough to remove without damaging. So, I had to wait until the units were de-installed to provide the stickers. Once that information was provided, I was promptly informed that "I noticed that there's an issue to raise or clarify with another department before we process your Reward request. We will let you know once we get a response from them. Thank you." And so, the waiting begins!

I contacted the de-facto leading manufacturer of mini-splits and was directed to a local gold-plated distributor/technician. If a system was provided/installed by their gold-plated personnel, I would receive a 12-year warranty on the system (nice) but the cost to provide/install was $5,700. To purchase just the system online, is $1,370 including shipping/sales tax (although I'm told that, for some reason, the distribution warehouses from which the HVAC techs have to purchase these systems, charge the HVAC techs more for the systems than the online prices -- so no deals for them). So, I could purchase 3 of these systems online, and still pay someone $1,590 to install the first one and would arrive at the same price (and have 2 spares, regardless of the length of the warranty). Note that the installation time to swap out an old system for a new system is about 3.5 hours -- at least that's what it took the HVAC tech to swap out the old system and replace it with another of the top 3 brands -- so $1,590 is probably a little on the high side for installation as well. I understand that one is paying for overhead, tools, trucks, insurance, experience, etc. but in this instance, I felt that the premium was just too high. 

So, the moral of the story is that mini-splits are still a quiet and efficient solution for may applications, but that getting them repaired may be problematic as repair knowledge and parts availability could be an issue. One HVAC tech told me that it's not uncommon to be on the phone with tech-support for 2-3 hours (waiting for a call to be answered) and customers don't want to pay for that wait time, which is understandable. Like window and/or wall air conditioners, they may simply be throwaway systems once they begin malfunctioning. Hopefully once these units become more easily repairable, and/or the supply chain for parts becomes more reliable, these systems will be a fantastic alternative to traditional HVAC systems. But for the moment, leaving a Tenant boiling in the heat or freezing during the winter for several weeks while waiting on a technician and/or parts isn't realistic -- it may be best to just replace with a new system. 

Oh - and I still haven't heard back from the President's folks on the status of my "Reward"!

I don't have any affiliation with this app, but I've been using it for about a year, and it's got a lot of different applications, at least one of which is real estate related.

There are few things worse than showing condos to prospective buyers on a hot day, when in a condo complex whose addressing/numbering scheme was devised by a mad person (which seems to be most of them!). It's a lot of walking back/forth and trying to figure out a method to their madness -- and most listings don't have a good description of how to actually locate the condo within the complex once you're parked at guest parking. Some have a map at the entrance to the community, but it is generally oriented 90 degrees from how the community is actually laid out, furthering the confusion. 

Here's where this simple, but ingenious, app saves the day. The creators of the app have divided the entire world into 10'X10' squares, and each square has a unique 3-word identifier. If the listing agent uses the app, they can post the 3 words closest to the front door of the condo making it incredibly easy to find, assuming that you are using the app as well. You can even direct your favorite GPS app to give you directions directly to the 10'X10' square (it simply converts it to latitude and longitude for the directions app). Or, prior to leaving one's office to show a condo, you can locate it on a map that includes unit addresses, and then determine the 3-word identifier by comparing it with the map within the app (What3Words is the name of the app -- available for iOS or Android, or at view at www.What3Words.com). When showing the property, fire up the app and it will take you directly to your desired location.

Need to find someone at the beach, Disneyland, mall, camping, or other event spread out over a large area? Simply let them know your 3-word location, and if they also have the app (best to coordinate in advance) you can easily find one another. Give it a try - it's a great concept!

As Realtors are not authorized to provide tax advice, I'll preface my comments with the recommendation that you consult with your tax professional to discuss possible tax strategies.

Also, I didn't take the following path myself -- but in hindsight, I should have!

I got to thinking the other day, for anyone fortunate enough to be pushing up against the potential capital gains cap on the sale of their primary residence ($250K for single individuals, or $500K for married couples) and who are also over 55 years of age -- there's a possible tax avoidance strategy that you may want to consider. And if the two lines cross (age and capital gain maximum) then you can maximize the impact.

When you reach 56 years of age (i.e. are over the age of 55), you are allowed to sell your home and purchase another, within California, and maintain your current property tax base (Prop 19 -- essentially replaces Prop 60 and Prop 90). Likewise, if you're married, and have lived in your home for 2 of the past 5 years, you can take up to $500K in capital gains free of capital gains tax (regardless of age). I've always considered these items separately but hadn't really thought of utilizing them at the same time.

For example, if one paid $500K for their home a number of years ago, and it's worth $1,000,000 when they turn 56 years of age, they could sell it for $1M, and then purchase a replacement property within California, also for $1M (just to keep the example simple). So, what has been accomplished, other than one having to make a lateral move? Two things:

a) the property tax on your new house will be about the same as with the old house -- about $6,000/year (vs $11K/year or thereabouts which would be the approximate standard rate for a new home purchase of $1M)

b) your basis in the new house would be $1,000,000. So, if you were to sell the new house a few years later for another gain -- let's say it sells for $1,100,000 -- you would have no capital gains tax to pay (and for a married couple that number could be as high as $1,500,000). If you had remained in your old house and sold it for $1,100,00 you would have a potential taxable capital gain of $100K. and if you waited until the former house was worth $1,500,000 you would be looking at a potential taxable capital gain of $500K -- that's real money ($100K assuming a 20% capital gains rate, and ordinary California income tax on top of that!). 

Note that the examples above are simplified, and don't consider capital improvements, cost of sale, and pre-sale improvements, all of which can be utilized to increase one's basis - but the concept is the same.

Just a thought for those over 55 (or nearing that age)!

Home stagers, Realtors, and the media have made it abundantly clear that one should properly stage a home, either with one's own items/furnishings and/or items brought in from the outside to make the space "pop" such that prospective buyers couldn't imagine themselves not living there!

But what about the spaces that the general public doesn't always get to see first-hand, but that their home inspector checks out? I think it's equally important (if not more so) to make sure that these areas are in good shape, as they indicate to your prospective buyers how well your home has been maintained. Here are a few examples:

- If your home has a crawl space or basement area, make sure that it is free from debris. Contractors are not always the best about cleaning up after themselves, often leaving behind old galvanized pipes, scraps of new pipes being installed and/or of the old pipes being discarded. Wood scraps under the house are also not a good sign, as termite inspectors will call them out as cellulose debris, or "Section 2" items -- items that may lead to termite issues in the future (what termite doesn't want to chomp on some loose wood in a protected environment!).

- In crawl spaces, also make sure that there is no moisture on the ground from leaking pipes (either drain or supply lines), a shower stall, or from a leaking AC condensation pump. If wet after a rain, check around the foundation, and make certain that downspouts are functioning properly and draining away from the house/foundation. 

- In both the crawl space and the attic, make certain that all electrical junction boxes have covers. It is very common for inspectors to call this item out, and it's a simple and inexpensive fix. Not having them is an indicator to a buyer that the seller hasn't paid attention to these types of details. Also, there shouldn't be any electrical or low-voltage (TV cable/phone) laying in the dirt -- all wires should be properly affixed to the floor joists or ceiling joists/rafters if in the attic.

- Likewise, in both the attic and the crawl space, check that any visible flexible ducting is not touching the ground (if underneath) and that there are no visible holes/tears in the ducting insulation. If so, have repaired/replaced by a skilled HVAC professional. If it appears to be older, asbestos-covered ductwork, then best to leave to a licensed professional. It's about $1,000 to have the asbestos covered ducts removed from a typical 1950s/1960s tract home, but of course you'll have to have new ducts installed as well.

- Check that bathroom and kitchen vent hood ductwork (generally in the attic, except in the case of downdraft stoves, which may be in the crawl space area) are in good condition, and that they properly exit through the roof (and are flashed properly on the roof so that they don't leak) and don't simply terminate in the attic. While you're on the roof, with a spray can, paint all of the pipes that protrude through the roof the same color as the roof -- makes a subtle yet noticeable difference when driving up to the house. 

- Look under all of the sinks for leaks, and/or any flexible, accordian-style flex drains (usually in bathrooms). While convenient, they tend to trap debris and inspectors will always call them out. If the cabinet floor of any of the sinks is decayed or bowed (common, as there may have been small leaks over the years) consider having a handyman remove/replace the bottom of the cabinet. 

- The water heater should be properly strapped (top 1/3 and bottom 1/3, with the bottom 1/3 being at least 4" above the controls). There should also be a copper pipe attached to the temperature/pressure relief valve (TPR) that terminates within 6" of the floor. And with all gas appliances, there should be a "T" (sediment trap) in the gas line near the appliance, where any small particles can be trapped. While not critical, inspectors will call the item out, although most buyers aren't too concerned with sediment traps. Wipe the water heater down, and remove all cobwebs, debris, etc.

- Check the furnace area for cobwebs and dust as well, and clean in/around the areas as necessary, assuming that it's accessible. Also replace the air filter (or clean the filter if it is a reusable filter) as this is an often neglected area in many homes. Check that the thermostat works well for both heating and cooling, and that the condensation pump, if any, is operational -- put a little bleach and/or vinegar in the pump reservoir to discourage algae which can clog the float switch. Inspectors also don't like to see gas flex lines passing through the furnace case (they tend to have sharp edges and there is concern that during an earthquake, the flex line could get sawn through by the furnace case). If necessary, installation of a small length of iron gas pipe through the furnace wall is an inexpensive fix.

- Visually inspect all rodent screens and/or bird blocks (under eaves) to confirm that they are not missing, torn, or otherwise broken, which could allow for rodents to enter the structure. Replace or repair as necessary. 

- If your home has a brick chimney, there's a good chance that it is missing its chimney cap (generally stainless steel or plain steel). Inspectors will always note a missing chimney cap. Not only will it arrest sparks (for wood-burning fireplaces), but it will also just-as-importantly reduce the amount of moisture entering your chimney, which tends to deteriorate the interior surfaces of the brick/masonry. While the chimney sweep is up there, have them seal any cracks in the cap of the chimney as well. 

- Make certain that there is a working, 10-year sealed-battery type (or hardwired with battery backup) smoke detector in each bedroom, and in the hallway outside of each bedroom. For the hallway, you can also use a sealed combination type smoke detector/carbon monoxide detector instead. If not a combination type, then you'll also need a carbon monoxide detector in the hall outside of each sleeping area. For multi-story homes, you'll need a sealed-type smoke detector on each floor of the home, as well as a carbon monoxide detector. If there are no bedrooms on the lower floor of a multi-story home, then I generally suggest placing them near the base of the stairwell leading up to sleeping areas (in addition to the units placed in the hallway(s) outside of bedrooms). If you have a basement or crawl space, it doesn't hurt to place them there as well, especially if your furnace and/or gas-water heater are installed in those areas.

These are just a few examples of areas that can be "staged" at a relatively low cost -- while they won't make any difference in the beautiful photos of your home that result from careful home staging, they'll make a huge difference in keeping the buyer in love with your home, after they've made their offer and are conducting their due diligence! If I'm fortunate enough to be your Realtor when you sell your home, we'll discuss these items and many more to make your home a great deal for prospective buyers!

​It seems that whenever one reads a news article or scans a headline regarding U.S. Military Veterans, a common theme is that "Americans love Veterans!" -- which seems to be mostly true except, apparently, when it comes to selling them their home!

While most enlisted military personnel don't make a lot of money, VA benefits are often touted as an offset -- "Buy a house with 0% down!". Of course that's not entirely true -- closing costs (approximately 1.5% - 2% of the purchase price) and the 2.15% - 3.30% VA Funding Fee can result in a need to have anywhere from approximately 2% of the purchase price (if the fees are rolled into the loan) to 4.15% of the purchase price - in Southern California, on a $700K home that's anywhere from $14K to $29K -- out of reach for many young Veterans -- which is why VA loans/deals are so rare. That, and the large quantities of cash that more affluent buyers are often able to bring to the table so their deal looks "better" -- so sadly, the Veterans that we as Americans love are rarely given an opportunity to participate, even if they can afford the monthly payments. I've had a bank (house in foreclosure) accept a Veteran's offer (when there were other higher offers), accepted an offer -- on behalf of my seller client -- on a short sale for a Veteran, and assisted a Veteran buyer who had a larger down payment from the sale of another house purchase a home. All went very smoothly, closed on time, and without any drama.

Sellers, Veterans are simply asking for a chance at purchasing your beautiful home. When it closes, the net to you is the same as an all-cash offer at the same purchase price - and it gives a young Veteran and his or her family an opportunity to begin building their own memories.

​So if you're selling your home, and you receive an offer from a Veteran, with our without a large down payment, please consider it -- show them that Americans do truly love their Veterans -- and not just when we need them!

30 years ago, my wife and I purchased a townhouse as our first home together. The mortgage that we took out at the time was a 30-year adjustable, at about 9.5% (I can't recall the actual interest rate at the time - but that's pretty close).

While it was tempting over the years to refinance for a variety of reasons -- we didn't. The interest rate slowly declined until it actually hit a floor of 5.125% a few years ago when interest rates were in the low 3% range. But by that time the payments were mostly principal reduction, so refinancing didn't make much sense. 

And now, here we are, 30 years later, with one payment left! Never thought I would see the day!

UPDATE - Just received a letter from Wells Fargo regarding my last payment. As a reward for making all of my payments on time for the past 30 years, I'm now required to send my last payment in via wire transfer or cashier's check (requiring an unnecessary trip to the bank). Thanks Wells Fargo -- for (making me) go the extra mile!

For every escrow there is a timeline of events that is spelled out very specifically in the contract between buyers and sellers. The only "float" in the schedule (unless agreed to by both buyer and seller) is that if a contractual deadline falls on a weekend or holiday, then it rolls over to the next business day. Generally days from acceptance of a contract are measured in calendar days, with the exception of the initial deposit from the buyer, which is due in 3 business days from acceptance.

While easy enough to count out manually on a calendar, it's easy to make a mistake and/or forget about holidays (or can be time-consuming if you're trying to consider "what/if" strategies during the formation of the contract). So I created a spreadsheet to map it out very quickly (it's also very easy to then export the data to my calendar). Items in blue - days from acceptance and/or days prior to close of escrow - can be modified. - For most escrows, only the acceptance date and length of escrow need be input as the other dates remain relative to those two anchor dates.

                 If you would like to view/download a copy, please click on the button below

There are new laws regarding residential pools for 2018 -- they currently don't apply unless you're pulling permits to have your pool remodeled (or installing a new pool), but like many laws could migrate to being the norm. And if you have small children, grandchildren, or guests with small children, it might be a good idea to consider some of the following items (including a secondary drain, to avoid suction-related incidents):

Here is the text of the new law (CA SB-442).

Section 115922 of the Health and Safety Code is amended to read:

115922. (a) Except as provided in Section 115925, when a building permit is issued for the construction of a
new swimming pool or spa or the remodeling of an existing swimming pool or spa at a private single-family
home, the respective swimming pool or spa shall be equipped with at least two of the following seven drowning prevention safety features:

(1) An enclosure that meets the requirements of Section 115923 and isolates the swimming pool or spa from
the private single-family home.

(2) Removable mesh fencing that meets American Society for Testing and Materials (ASTM) Specifications
F2286 standards in conjunction with a gate that is self-closing and self-latching and can accommodate a key
lockable device.

(3) An approved safety pool cover, as defined in subdivision (d) of Section 115921.

(4) Exit alarms on the private single-family home’s doors that provide direct access to the swimming pool or
spa. The exit alarm may cause either an alarm noise or a verbal warning, such as a repeating notification that “the door to the pool is open.”

(5) A self-closing, self-latching device with a release mechanism placed no lower than 54 inches above the
floor on the private single-family home’s doors providing direct access to the swimming pool or spa.

(6) An alarm that, when placed in a swimming pool or spa, will sound upon detection of accidental or
unauthorized entrance into the water. The alarm shall meet and be independently certified to the ASTM
Standard F2208 “Standard Safety Specification for Residential Pool Alarms,” which includes surface motion,
pressure, sonar, laser, and infrared type alarms. A swimming protection alarm feature designed for individual
use, including an alarm attached to a child that sounds when the child exceeds a certain distance or becomes submerged in water, is not a qualifying drowning prevention safety feature.

(7) Other means of protection, if the degree of protection afforded is equal to or greater than that afforded by any of the features set forth above and has been independently verified by an approved testing laboratory as meeting standards for those features established by the ASTM or the American Society of Mechanical Engineers (ASME).

(b) Before the issuance of a final approval for the completion of permitted construction or remodeling work,
the local building code official shall inspect the drowning safety prevention features required by this section
and, if no violations are found, shall give final approval.

Years ago I worked for a small company that had secured IBM as an account, and we were the (much-too-small) sole source provider of services for them. They would often present us with intractable demands -- "we need a firm price to completely wire this entire military base with fiber-optics and a structured cabling system -- it's spread out in 150 buildings over a 250 acre area. We'll need the quote by tomorrow -- oh, and we have no building plans, but here's a quick sketch on the back of an envelope". That's where I became acquainted with the concept of "Fast, Cheap, or Accurate - Pick Any Two" because that was really the choice!

Fast forward to today, and it's not uncommon for people to either request via email, phone, or social media for referrals for tradespeople (plumbers, electricians, handyman, etc.) that "do good work and are reasonably priced" (oh, and they usually need them right away!).

I always think that when hiring any kind of professional, whether it be a tradesperson, Realtor, auto mechanic, or surgeon, for example that one has to consider a variety of factors. How long did that person have to attend schooling, and/or how many years of successful experience do they have in that profession? Likewise, what is their investment (or their company's investment) in tools, machinery, physical space, vehicles, and insurance, and the investment in time to learn how to use the proper tools and machinery (where applicable)? Do they have to spend time to shop for and deliver parts for your project? No one wants to overpay for services, but likewise, there is a fair price to be paid for services to compensate that person or company for their investment in the above, and their expertise -- after all, that's what this person does to earn a living for them and/or their family. Paying a fair price also incents the vendor to do their best work, and to return if something wasn't done properly or to your satisfaction.

I've also never been a stickler, at least on small home repair jobs, to get firm estimates up front (of course for larger projects, that's a must). The tradesperson has to bake into the price their time for stopping by to provide an estimate, not knowing if they will get the work -- hardly worth the time, effort, and gas to earn $100. If you have a referral from a reliable source, then simply hire the person to get the work done. If you must have an estimate, take a few photos, and text/email the photos and a detailed scope of work to the vendor. In many cases they can generally provide a fairly accurate estimate this way, and will be appreciative of the fact that you didn't consume a large block of their time in doing so.

Like any human interaction, be good to them and they'll be good to you (in most cases!).

One of the unique tools that most Realtors utilize is an electronic lockbox in which to store keys for listed properties. Each Realtor can access the lockbox utilizing a specialized device, or as many do, with an app on their cell phone. It's a very convenient and efficient system. When an agent accesses the lockbox, the listing agent is (nearly) immediately notified of who accessed the lockbox, and the exact date and time -- great for security and follow up.

There's an additional layer of security that one can add with these lockboxes, in the form of a secondary code that must be input, along with the use of an electronic Realtor lockbox key as noted above. While most agents have good intentions, and try to arrive on time for a scheduled appointment, there are often circumstances that are out of their control that cause them to be late, or early, to a scheduled showing. It is not unheard of for clients to call a few minutes prior to their meeting to say "I'm running 30 minutes late -- see you in a bit" -- all well and good, but if you're viewing 5 or 6 houses, the whole schedule is now out of sync. Likewise, buyers will spend less time at a house than anticipated (or want to skip it all together) or will spend more time at a property than allocated. In all cases, it will modify the schedule of showings. Most homeowners are very understanding, but of course, some are not! But the worst is when an agent shows up unannounced..."we were just driving through the neighborhood and saw your sign" -- they knock once, hit the lockbox, and let themself (and their client) in -- and you're in the shower! That's where that secondary code noted earlier (Call Before Showing or CBS code) comes in handy -- no unexpected showings!

The downside of the CBS code is that once an agent has it, they now have unlimited access, as the code is not easily changed. And they might circle back with another client, or to take a 2nd look -- again, unannounced. That's where my new lockbox comes in handy.

With my new electronic lockbox, I can provide a code to an agent (or a tradesperson -- painter, plumber, electrician, for example) that is good for one opening of the lockbox, or that is good for a time/date range, and then expires. Note that the Realtor electronic lockboxes can only be used by Realtors -- they won't work for tradespeople, as most tradespeople don't possess lockbox keys. Up until now, I generally used combination lockboxes for tradespeople, but the combinations aren't often changed, and once they have the combination they have unlimited access as well -- the majority are honest and I've not had any problems, but it is a weakness from a security perspective - this eliminates that weakness. Like the Realtor electronic lockboxes, I'm also provided a record of who accessed the lockbox (although it's not instantaneous unless the person opening the lockbox uses an app, which would be unusual) and I can generate codes on the fly, and text to either agents or trades personnel (even the homeowner if they've inadvertently locked themselves out!).

So all in all a good find! I'm also considering purchasing the deadbolt model for my own home.

The City of Orange recently released a draft copy of the revised design standards for the Old Towne Orange historic district. The current design standards document was published in 1999 and so a new version is welcome and long overdue! Click the photo to the left to view the draft.

You'll see in the draft references to elements such as solar panels, vinyl windows (not appropriate), vinyl fencing (not appropriate), modifications to non-historic (aka "non-contributing") structures, garage doors, satellite dishes, in-fill projects and the like.

Please review -- if you see something you don't feel is correct, or this is missing, please let the City know! They are currently soliciting input prior to submitting the final version for City Council approval. Comments and/or suggestions can be left here, and they will be passed along to the City, or you can email the City directly:

Ani Mnatsakanyan (Ma Not Su Kon Yen)
City of Orange - Associate Historic Planner
[email protected]
(714) 744-7223

I've written before about the home inspection process, and several items that home inspectors routinely call out. But this post is more focused on the actual negotiation process once a home inspection has taken place. Of course one's perspective is going to be different, depending upon whether you are the buyer or the seller, but hopefully there is something to be gained by looking at the situation from the other party's point of view as well.

So an offer has been accepted, and escrow is open -- it's all downhill from here -- right? Not! There is still at least major negotiation with which to contend -- repairs!

I'm of the opinion, whether you're a buyer or a seller, that clearly visible defects in a property should be accounted for in one's original offer. For example, if the driveway or pool is completely cracked, crumbling, and clearly on its last legs, or the roof is clearly shot, then that should be taken into consideration when making or accepting an offer. From a buyer's perspective, to ask for a major credit for these kinds of items, while allowed per the Agreement, seems a little disingenuous.

On the other hand, if the furnace or AC unit is faulty, or if the roof has issues that are not visible from the ground -- or other problems are uncovered during the inspection which wouldn't be obvious when briefly viewing the home -- the a buyer is justified in asking for the items to be repaired, or a credit issued via a formal "Request for Repairs".

That's where the fun begins! When representing buyers, I recommend focusing on the larger reasonable items, and not worrying so much about the minor items, especially if a home is generally well maintained. I also recommend submitting as much detail as possible when requesting a credit -- line item pricing for labor and materials for each item. Prices are easily obtained from online sources such as Home Depot or Lowes, and after seeing the same repairs many times, it's fairly simple to estimate labor costs. For more specific costs, one can obtain a quote from an electrician, plumber, roofer, or chimney sweep, for example. Once all of the facts are collected, the request for repairs can be presented to the seller.

When representing a seller, I also like to collect as much detail as possible regarding repair items. While the buyer's estimates are a good start, it also makes sense to compare their estimated costs to your own estimates, just as a check an balance. I'm not a big fan of blanket requests for credit - "credit of $3,500 for items mentioned" -- how did they arrive at that number? One other pet peeve are requests that simply list the page number and paragraph number of each item that they want repaired/replaced/credit. It's very time consuming to have to continually reference the inspection report for each item (and these requests tend to have a longer list of items). It's much simpler for all parties if the items are just written down in plain English (i.e. "hall bathroom vanity faucet leaks" or "GFCI outlets to be installed in kitchen, baths, and laundry room" - easy peasy - vs. "page 7, #1.2, page 11, #7.8, 7.9 and 7.11")

Of course a buyer will work to obtain the largest credit and/or have as many items as possible addressed -- completely understandable. Likewise, a seller will either want to minimize the number of items addressed, and/or reduce the credit to a small a number as possible -- also completely understandable. In practice, and in any negotiation, both sides want to feel as though they've "won", or at least feel as though they've been treated fairly. And of course this negotiation comes on the heels of the original price/terms negotiation, where in the current market it is not uncommon for one of the parties (usually the buyer) to feel a little beat up. That's where a little common sense comes into play. If either the buyer and the seller adopt a "take it or leave it" position, a deal can rapidly fall apart. The seller loses the sale, and the buyer loses the house, their home inspection fee, and possibly an appraisal fee. With a little give-and-take this can almost always be avoided. If the buyer is willing to accept a little less, and if the seller can give at least a little, it shows good faith and is usually the last hurdle (other than the loan!) to successfully getting the transaction closed, and all parties walking away feeling good about the deal!

​In residential real estate transactions, when the home being sold is occupied, it is not uncommon for the original offer, or a seller's counter offer, to include a provision that the seller can remain in the house (usually on the buyer's dime) for up to 3 days after the close of escrow. If the seller is also buying a house, they may ask for up to 5 days after closing to vacate, as the sellers of the “downleg” property may also have to wait 3 days for the sellers of their replacement property to vacate.  That gives them 2 days to move before their buyers take possession -- all very complicated! And while rare, it is unfortunate when a seller moves out prior to the close of escrow, only to find out that their house won't close for some unforeseen reason (buyer loses their job and can't get the loan funded, for example). Now they’ve moved out, the house is vacant, and they’re paying a mortgage, and rent, while the house is put back on the market. The whole intent behind delayed possession is to give sellers ample time to move, when the closing date isn’t cast in stone (and it rarely is).
 
Here’s the issue: Most buyers conveniently forget that they have to wait up to 3 days before they can get possession of their new home! Understandably, they’re very excited to get inside, and start painting, personalizing, remodeling, etc! They’ve likely looked at many houses, scrimped and saved, filled out mountains of paperwork, and have gone through an emotional roller coaster during the initial negotiation process and the inspection and repairs negotiation! Now they want to move in and enjoy the fruits of their labors and the joys of home ownership -- but they have to wait 3 more days! THIS IS THE LONGEST 3 DAYS OF A HUMAN’S LIFE - THE DAYS BETWEEN CLOSING AND POSSESSION, HA HA!
 
So what happens next? They begin calling their agent every 1/2 hour to see if they sellers have moved out early, while simultaneously stalking the house to see if there are any moving trucks, cleaning people, or other signs of the sellers vacating early -- all very normal behavior. The buyer’s agent then begins calling the listing agent every hour to see when keys can be procured, which while “normal” is frustrating as the agreement, which everyone signed, clearly states that the sellers have 3 days after close of escrow to vacate the property! During the 3 day period, the seller essentially has Tenant’s rights, which allow for “quiet enjoyment” (a legal term) of the property -- no unannounced intrusions -- and generally no intrusions -- it’s a stressful time for all, and a good time to give the sellers some space.
 
I’ve had sellers show up to retrieve belongings, only to find people (buyers) in the house, but to be fair, have also had situations where a seller shows up after the 3 day period to pick up something they forgot, entering the house without the buyer’s permission -- both scenarios are trespassing, although it tends to happen more with buyers than sellers. “We just wanted our contractor to look at something real quickly - hope that’s OK” -- that’s a common excuse for buyers to show up announced, looking to get into their new home before the 3-day period -- and I’m sure that there are many more!!

When buying or selling a house, included in the contract is a close-of-escrow date.  It may be based up a particular length of escrow (30 days, or 45 days, for example) or may be specified as a pre-determined date (June 15, 2016 for example).  While this is the date on which both the buyer and seller can utilize in their planning, it is not uncommon for this date to shift,  for a variety of reasons. Because of this, I often counsel my clients that the close-of-escrow date is not unlike the due date for a baby -- it's a best guess, but be prepared for it to change!  The most common contributor to an escrow that extends past its due date is that loan docs are delayed -- either by additional underwriting requirements or mandatory waiting periods between events (issuance of loan docs and signing of loan docs, for example).  Of course if a buyer and seller both agree that the date should be changed either backwards or forwards, in writing, then no problem.  There's also the issue of fumigating for termites, if required, as you'll have to move out for a few days as well, usually just prior to closing.

Another wrinkle occurs when there is another house that needs to be sold to procure your new house, and/or the house in which you're buying is not vacant prior to your purchase.  A minor delay in either transaction also impacts the sale of your home.  So your movers, house cleaners, packers, and the like need have to have some flexibility built into their schedules such that moves can be made efficiently and smoothly.

It's also not uncommon for home buyers and sellers to "have to" move on a particular date or the sky will fall. But when an issue then crops up on their end (for example their loan docs are late), miraculously they find a solution! Often, buyers want to move some of their belongings into their new home either prior to close and/or after closing but prior to their contractual date of possession (often 3 days after close of escrow).  Never a good idea! Whose insurance covers those belongings, and what about the person moving out of the property -- their life is generally in a state of mild chaos as well, and the added stress of others moving items around them generally isn't good for anyone involved -- that's why mini-storage exists! Rent a unit for a month, and use it as a buffer in the event of delays in your closing date.  Or rent a pod and see if you can negotiate having it delivered to the driveway (as long as it doesn't block access) of the new house after closing --but before you're allowed possession -- that seems like a reasonable compromise and you won't have to move twice!  Be prepared to stay in a hotel for a few days if necessary as well -- preferably one with a spa so that you can relax a little during this hectic time!

In the course of conducting home inspections, whether it's for a buyer or seller, it is not uncommon to come across flexible dryer vents made of plastic.  These vents are popular, inexpensive, and sold at most hardware stores -- so they are everywhere!

Unfortunately, they can also be highly flammable! As dryer lint is also highly flammable, and somewhere in your dryer there is a flame (or element) generating heat, you may want to think about swapping your current plastic flex hose for an aluminum flex hose or rigid pipe system.

Here's an eye-opening video on YouTube as to what can happen if you have a spark catch hold in your plastic flex hose:

Click Here for YouTube Video

At some point prior to accepting an offer on a home listed for sale, the listing agent and seller will request that the buyer provide "evidence of funds" or "proof-of-funds" in an amount greater than or equal to the offered down payment plus closing costs associated with the transaction.  This will be in addition to a pre-approval for the loan that the buyer will be utilizing to purchase the home.  Of course if the transaction is "all cash" then the seller wants to see evidence of funds for the entire amount of the purchase, plus any anticipated closing costs.  Many buyers (especially first time buyers) forget about the closing costs element of the transaction, which can be substantial (about 2.125% of the purchase price, less for all cash buyers). This is certainly understandable, given that most people don't purchase homes on a regular basis -- it's easy to forget between transactions and if you've never purchased a home, you wouldn't know unless someone told you (might be a good topic for a Realtor/buyer conversation!).

Generally buyers will provide (or should provide) a copy of a recent bank statement, brokerage statement, or other documentation that clearly indicates their name, name of the financial institution, at least a partial account number, and the balance in the account.  But that's not always the case!

On one occasion, I had a buyer who insisted that they had all cash, but it was just that -- cash!  It wasn't in an account anywhere, but he expected home sellers to just "believe" that he had the cash.  I suggested that he might put it in an account for a few months to document the funds, or at the very minimum, photo-copy the funds such that a prospective seller could actually see that the cash was real.  Needless to say, this particular individual did not wind up buying a home!

The photo above is another example of the "evidence of funds" that I've received.  While i don't doubt that these funds exist (or had existed at some point in time), there's no link between these funds and the buyer!  It could be a relative, a friend, or anyone for that matter!  Evidence such as this won't get your offer accepted and it certainly won't make it past an underwriter.

So the moral of the story is, when you're ready to purchase a home, make certain that your pre-approval is solid (and recent -- and desktop underwriting or "DU" approval is even better) and that you have recent "evidence of funds" in hand!!

While a necessary evil, home inspections and requests of the seller to conduct repairs on items found during an inspection seem to be the wet blanket thrown on many home sales.

On the one hand, the seller usually doesn't want to make any repairs, while the buyer views the long list of items generally found in an inspection as a fix-it list for the seller.  

The third party in the love triangle is the home inspector themselves.  While they are simply doing their jobs, one of the more annoying elements is pointing out items that are not up to current code (even though bringing an older house up to current code is not a requirement).  Here are a few of my least favorites:
​

• No anti-tipping device on the kitchen stove.  This is a fairly new one.  I survived my entire childhood (as did my children) without once opening the oven door and standing on it, potentially tipping the stove over.  I think vigilant parenting is a better answer.  The device is a $5 item, but most handyman have never installed one because it didn't become a requirement until recently.  They have to pull the stove out (without marring the kitchen floor), get behind the stove and attach one portion to the wall, and the other to the back of the stove (which may void the warranty, as it may require drilling into the back of the stove).

​

• No sediment trap on the gas line for gas appliances.  This is a small "T" in the gas line that theoretically traps any sand or grit in the gas line prior to the gas entering the appliance.  I've had gas appliances for 30 years in several properties and have never encountered that problem -- nor have I ever heard of anyone having that problem.  But apparently, now it's a problem!  Of the few that I've seen, most have been incorrectly installed -- so while they get an "A" for effort, an "F" on execution (but still likely is a solution in search of a problem).

• Extending the water heater temperature/pressure relief valve (TPR valve) to within 6" of the floor.  Now in some cases, if one has to walk by the water heater frequently (like when going to your car in the garage, and the water heater is adjacent to the door) -- it makes perfect sense!  No one needs a face full of scalding hot water should the valve decide to open at just that moment.  But if your water heater is outside, in a recessed cabinet, or otherwise not in a right of way, as long as it is directed downwards (and not at face level) then that would seem adequate.  Likewise, while code requires copper pipe, It would seem that PVC or even galvanized pipe would be suitable for the extremely brief period for which this pipe would ever be used.

 

• GFCIs - Ground Fault Circuit Interruptors (sometimes referred to as GFI's) - those outlets in the kitchen and bath with the small reset buttons on them.  When I remodeled my kitchen and my baths, I installed them, but more so to keep the inspector happy than an innate fear of being electrocuted because I might drop my toaster or curling iron into a sink full of water.  While I suspect that there have been some unfortunate incidents over the years, one wonders how many incidents are we preventing by requiring everyone to upgrade to GFCI outlets.  Grounded outlets -- same story.  Many of the items that we plug into outlets today aren't grounded anyway, so the inclusion of a ground wire in the outlet is a non-event.  Sensitive electronics? They should have a grounded outlet.

​
  ​​

A few weeks ago I wrote about a few listings/listing photos that should make any seller curious about seeing a copy of their own listing -- and not just take their agent's word for it that the listing will accomplish their mutual goal of selling the house (click on the "Real Estate" category to the right and it should pop up).

This morning, I came across a listing that stood out as I had seen it before many years ago.  It appears that the owner has put the property back on the market with several different brokers within the past few months. While I expected to see that the listing photos had changed (they had -- although one of the agents used a very inexpensive wide angle lens with which to take the photos, resulting in a "fish-eye" effect, with very curved walls -- like living in a submarine!).

What I didn't expect to see was that the last agent had simply cut/pasted the listing description from a prior listing agent!  They couldn't even be bothered to draft a new description of the property!  My first thought was that perhaps they worked for the same office/broker and simply transferred the listing from one agent to another (maybe one left the business, or the broker, but the listing remained with the brokerage, for example).  Not so -- different offices, different companies, and different brokers.  Here's a copy of the pertinent parts of the listing:

And here's the 2nd listing:

And here's an example of a listing photo taken with an inexpensive (cheap!) wide-angle lens - note the curved door frame!:

Title insurance seems to be one of those necessary evils that everyone is forced to purchase when buying or selling a home -- one rarely hears of title insurance claims being paid, so it seems as though the title insurance companies have a pretty good thing going.  I suspect that it's a profitable endeavor, but like any insurance, when you need it you reaaallllyyyy need it and you're glad it's there!

While I've been fortunate to not ever had a title claim situation, I have had a few instances where a title company was able to bring resources to an issue that might have become a bigger problem in the future!

Recently, I was involved in a transaction where the seller, when purchasing the property a few years prior (direct from another party for cash - no Realtors or lenders involved), neglected to require title insurance from the seller.  When he decided to sell, the lack of a clear chain of title became a huge impediment to the sale, requiring several months of paperwork and affidavits to provide the title insurer for the the current transaction confidence that they could deliver clear title to my clients (in this case, the buyers).  So the good news is that my clients are covered should there ever be a title issue in the future -- most likely when they sell the property down the road.  They should have smooth sailing at that point

Another situation arose when it was discovered that a portion of the back yard of a property in which I was involved selling was thought to belong to Cal Trans.  As it turned out, the property still belonged to the family of the original developer of the tract.  My clients were able to use the property, but at some point the owners could put up a fence (and likely get rights to an easement across my client's property for access) to build a billboard, cell tower or other use that was suitable to a long, narrow strip of land adjacent to a freeway.

And the the last example that I recently encountered was a simple structure that a neighbor had built that crossed my client's property line.  Fortunately, it was shoddy construction and easily removed (which the City required/enforced upon discovery). Again, the title insurance company sent out an inspector to confirm that the structure was not infringing upon the neighboring property -- title insurance couldn't be obtained until the offending structure was demolished.

So when you see title insurance on your closing statement, whether buying or selling, rest assured that it is a valid service and may very well protect the largest asset that you own!

Thinking about buying a house, car, or other consumer product requiring financing? Or selling a house? "Know Before You Owe" is the the new mantra of the Consumer Financial Protection Bureau (CFPB) -- see my blog post from 6/3/2015 for additional information.

Yesterday, I attended a brief seminar on the new rules and guidelines, the majority of which are spelled out on CFPB's website (click here for additional info), but there will be a couple of things of which buyers, sellers, Realtors, escrow companies, and moving companies will need to be aware:

• Escrow periods may extend from 45 to 60 days (vs the current 30 day norm)
  
• Some lenders are recommending extending the loan contingency removal period from the current default in the Agreement from 21 days after Acceptance to 30 days after Acceptance -- leaving the seller off market for an extended period of time with little to no recourse; great for buyers, not so good for sellers.
  

All of the fun begins for loan applications completed on or about October 3, 2015 (or thereabouts -- subject to change per the CFPB).

Every once in awhile, I'll come across a listing that makes me shake my head a little and I think "...is that the Realtor's best work?".

For example this listing below from a few years ago (single photo, trash cans/truck in the photo, and a very negative description for a very typical Old Towne house!):

Or would this be preferable:

Or how about this one from today (and yes, all of the photos in the listing are upside down, with the exception of one):

Of course sideways photos are fairly common as well, along with my favorite (I'll post the next one that I see) the shot out of the car window, with the car rear view mirror proudly in the frame -- the agent can't be bothered to even get out of the car!  In the photo below, the agent got out of their car, but then decided to use the car as a tripod (taking up about 1/4 of the shot!).

Occasionally I'll read an article or hear a comment along the lines of "...the Realtors are driving the prices up" or recently, in the case of the Chapman University proposed expansion, "...the Realtors are making big bucks selling houses to Chapman University".  I touched on this in a prior blog post, but here's the bottom line:

• Realtors don't dictate prices.  The market (willing buyers and sellers) dictate prices.  We educate our clients on the price at which we believe their property will sell, and then they determine the price at which they would like us to market and advertise the home.  The market will quickly tell us, in true Goldilocks fashion, if the house was priced too high, too low, or just right.
  
• Realtors do not select who purchases the home.   The owner of the home makes that decision, based upon the offer or offers in front of them.  Price is only one of many factors that determine whom the seller chooses to purchase their home, as there are a myriad of factors to consider in any offer.  Is the offer contingent upon the sale of another property? Is the offer cash or is financing involved?  What is the preferred escrow period?  is the prospective buyer an owner-occupant or an investor?  Is the prospective buyer strong financially?
• Realtors (the listing agent) have a primary fiduciary responsibility to the seller of the property -- all offers must be presented to the seller -- Realtors do not pick and choose which offers the seller considers (i.e. only investors, only owner occupants, only Chapman University parents, non-Chapman parents, etc.).

• Check and Balance on the offered price -- Appraisers conduct appraisals and are a check and balance in the system to protect the lender's potential interest in the property, as well as insure that a buyer is paying close to market price for a property (and not more).  In many cases the appraisals are close to the price offered by the buyer -- or in some cases there is a sizeable disparity between the offered price and the appraised price.  If the buyer elects to continue with the purchase at the offered price in spite of a low appraisal and it closes, paradoxically now that price becomes a legitimate comparable for the next sale in the area.

In Old Towne Orange, basic supply and demand is a huge factor in the price that prospective buyers will pay.  We have a limited number of homes for sale, a great location for quality of life and for commuters, and an overall unique environment that attracts buyers. So prices go up -- Realtors aren't driving the prices up.  I was in Washington DC last week and looked at a couple of real estate ads just for fun -- by DC standards, living in Orange County is affordable:

Drones seem to be everywhere one turns these days, and real estate has not been left untouched.  But is there a benefit or are drones just another gimmick to make the listing agent seem "hi-tech" and on top of the latest trends?

While I'm an early adopter of many technologies, I can't jump on the drone bandwagon.  Most of the aerial shots of real estate that I've seen look exactly as you would imagine -- a picture from 50 ft. above the house, with a slight fisheye effect from the usually lower-quality wide-angle lens.  I suspect if Google Maps/Earth and the the like weren't so prevalent, this might be beneficial, but we've all been able to get the same (or a very similar) perspective for several years by simply logging onto our computers.  Would that view compel me as a buyer to consider a particular home over another?  Probably not.

Recently I ran into another use of drones in real estate -- during a home inspection.  The inspector used a drone to "inspect" the 2nd story concrete tile roof.  Most inspectors will use binoculars if the roof is too tall and/or has too steep of a pitch on which to walk.  Likewise, they will avoid walking on concrete or clay tiles to avoid breaking them.  When the inspector first mentioned it, I thought the idea might have merit -- then I saw the photo (upper left corner of this post) included in the inspection report -- not much substance -- it would have to be a HUGE problem to even be noticed!  But I guess now the home inspector has a cool toy that he can write off as a business expense as it's used in the course of his work.  He's happy, his wife is happy, and the client believes that their inspector is "hi-tech"!  Disclosure: This is not the inspector that I generally use -- this inspector was retained by the buyer of one of my listings.

On the front page of my website, I publish the current number of "Active" MLS listings in Orange as of that morning.  Many graphs and news articles also include properties that are in "Backup", which indicates that they are under contract (in escrow) but will entertain backup offers in the event that the current escrow fails.   That number will be higher as it incudes both Active and Backup listings.  I think that showing only Active listings gives prospective buyers and sellers a more accurate view of the market.  Is it a Buyer's Market, a Seller's Market, or somewhere in between?

As of this morning, there are 210 "Active" listings in Orange.  But what does that mean?  Is that good or bad?  From a recent historic perspective, when the market was white hot in 2004 and 2005, for example, it was not uncommon for there to be only 75 to 85 properties that were "Active" in Orange on any given day -- clearly not enough inventory to satisfy the overwhelming demand at the time.  

When the market crashed in 2008, the average number of "Active" listings in Orange shot up to over 825 properties!  An increase of 860%!  Over time, that number decreased to about 350-400 properties on any given day, which produced a fairly balanced market.  A buyer could evaluate multiple properties, consider which worked best for them, make an offer, and receive a response (and maybe even some concessions) within a reasonable time.  For sellers, they had to have their homes on the market longer, but could generally negotiate reasonable terms on their replacement property.

Over time, inventory slowly receded, until towards the end of 2012 the average number of Active listings had dipped below 100 properties again.  There were expectations that the number of listings would gradually increase in the spring of 2013, as is common seasonally -- but that year it didn't happen, and prices increased in Orange approximately 27% -- lack of inventory, low interest rates, pent-up demand, and investor activity were all contributors.

Since that time, inventory has slowly crawled back up to approximately 200 properties (although it has been in the 170-180 range for the past few months).

So this morning's count of 210 properties indicates that we still do not have enough inventory to satisfy demand.  Just a little perspective as you look at that number on the home page each morning.

When listing and selling a house, it is the owner's responsibility to disclose any known defects in the property (although there are exclusions for some trusts and probate situations -- although best to disclose known situations nonetheless) to the prospective buyer of the property.  

I recommend to my clients that they carefully consider whether they would want to know about a potential disclosure item if they were purchasing the property.  If the answer is "yes" then it's a good candidate for disclosure.

Some situations are a "no-brainer" -- for example recent mold discovery and remediation should always be disclosed.  Known asbestos in the house?  Disclose! Inoperative appliances, faulty electrical, plumbing issues, roof leaks?  Disclose! Pets in the house? Disclose!  A death on the property within the past 3 years? Disclose!  Death of someone from AIDS in the house? Technically, one doesn't have to disclose this situation, but a good idea to disclose anyway (and if asked specifically by the buyer, definitely disclose!). A new freeway on-ramp being built next to the house within the next few years?  Disclose! Known sexual offender in the neighborhood (on Megan's List)? Disclose!  Added a room, installed a new water heater, furnace, roof, pool, plumbing, or electrical without proper building permits? Disclose!  Loud noises in the neighborhood (neighbors, trains, planes, motorcycles, freeway noise)?  Disclose!  Poor cell service in the house -- I would disclose.

But there are also gray areas -- the roof leaked 5 years ago, was professionally repaired by a licensed roofer and hasn't leaked since?  Likely not critical to disclose, but wouldn't hurt -- providing documentation that it was repaired goes a long way as well -- and shows that you have nothing to hide.   A roof leak that you repaired recently, but that may or may not have been thoroughly rain tested? Definitely disclose! Cracks in the slab under the flooring that you don't know about or have never seen? How would you know to disclose?  But if you saw the cracks in the floor when the flooring was being replaced, then disclose!

When a buyer closes and takes possession of a house, it is not uncommon for them to find things (mostly small) that were not disclosed by the seller and/or did not become known during a home inspection.  In many cases, the seller was not aware of the situation, and therefore did not have an obligation to disclose. However, if the buyer learns, from discussions with the neighbors for example, that a seller knew about a particular item, and did not disclose it, the buyer may have recourse against the seller.  So always better to over disclose than under disclose!