How To Quickly Navigate A Disclosure Package

When reviewing a property’s disclosure package, there can be dozen of documents and thousands of pages. Some relate to buying a house in general and have nothing to do with the specific property, while others reveal conditions of the property that matter.

Having a quick way to get an overview of the property will help you understand a property and possibly disqualify it. Here are the most important documents to get a quick understanding of the home's condition.

Most Valuable Seller Completed Documents

• TDS – Transfer Disclosure Statement
• SPQ – Seller Property Questionnaire

The seller must share all known conditions about the property. This includes defects as well as noisy neighbors or other disputes. However, it does not include things that they do not know and could not easily know.

Agent Visual Inspection (AVID)

This agent-completed document is intended for the seller’s agent to share what they see, given their elevated knowledge of houses and neighborhoods. It should include cracks that have been covered, floors that are out of level, dead trees, failing retaining walls, etc.

The agent is not expected to go on the roof or crawl under the house – but if inspectors have disclosed items in those areas, they should be shared here by the agent and by the seller in the aforementioned TDS and SPQ documents. 

Seller Pre-inspections

Seller inspections are customary but not required. If no reports exist, it is an opportunity for you, as a buyer, to hire your own inspectors.

• Pest Report

Most transactions will include a ‘Wood Destroying Pests & Organisms’ Report. This report concerns termites, beetles, and fungus that will damage the structure. It is not concerned with rodents or other animals, though they may be mentioned somewhere as a note. This report is separated into two parts. Those are the report itself and the Work Authorization (WPA), which includes the prices.

It is generally easiest to have both reports open and refer to the drawing of the house at the beginning of the report. These are generally sort of confusing and hard to read. But they will give you an idea of how much work remains to be done. If the seller has completed work, there should be a ‘Notice of work completed’ that shows what has been done.

The work in the report is split into three designations:

• • • Pest Section 1: Is active damage that requires treating or removal of wood.
    • Pest Section 2: This is a condition that, if untreated, will likely lead to damaged wood over time.
    • Further Inspection: This may be inaccessible because of water, no entry point, or maybe destructive testing–meaning that something has to be broken to see what is behind it.

The general convention with pest reports is that the seller will complete Pest Section 1 before the close of escrow. But – a strong market or an aggressive offer might mean that the buyer completes the pest work.

If there is A LOT of pest work to do, then the seller may prefer to lower the price and let the buyer do that work.

 With a pest report, it is important to review the notes about the crawl space. Often noted here is

• • • The condition of the ground (wet, muddy, etc.)
    • Evidence of past water intrusion.
    • Adequacy of Ventilation and level of humidity.
    • Evidence of rodent activity.

• Home Inspection Report

Most transactions will include a Home Inspection report.  Many will have a summary at the beginning or the end. Start with the summary to understand any highlighted issues.

Unlike the pest report, there will not be any range of cost on things in the Home Inspection report.  We should be able to provide a reasonable estimate for most things.

Look in the Home Inspection report for photos of the attic and crawl space, which are otherwise hard to see. Pay attention to the electrical system, roof's age, furnace, A/C, and hot water heater – all have reasonably accurate life expectations.

If the home inspector sees something of particular concern, they may call for a further inspection of the foundation, electrical, roof, heating, chimney, etc. If any additional reports are available, read those as well because they may have been recommended to inspect something questionable. 

• Natural Hazard Report (Summary)

This report is computer generated and looks at all of the maps for a given property. There is a summary page that tells you if the home is in High Fire Zone, Flood Zone, mapped landslide, or on an Earthquake fault, etc.

As you might expect, ‘Not In’ is what we hope to see.  But do not rule a property out just because something has a mark against it here. Ask your agent to review, and see how great of a risk or cost is associated with owning a property in a hazardous area.

 Remember, even a thorough review does not mean that they found everything. There is always risk in buying a house or anything else. However, by reviewing and understanding the disclosure package, you greatly reduce the risk of problems or surprises in the future.

If you are looking for an agent who is thorough and will walk you through and explain the above-mentioned reports, contact Brightwork today by clicking here or calling 925-200-6000.