Seller’s Disclosures and Appraisals – A Michael Clapp Dagnabbit

1. Seller’s Disclosure.  I believe everyone is now fully aware of who must provide a disclosure, but I wanted to give clarification on the type of disclosure they should provide.   There are two Seller’s Disclosure forms.  One was designed by TREC to meet the minimum standards of Texas Law – it is only a couple of pages long.  The second is provided by TAR (Texas Association of Realtors) which we are all members of.  This form takes the TREC form and expands the list of questions to 5 pages long.  If you were representing a buyer do you feel that it would be in your buyer’s best interest to get the more expanded form from the seller?  If not, I’m not sure that you’re a fit for our brokerage.  We want our buyers to get as much information as possible to make the best possible decision about their purchase. Likewise, we believe in removing as much risk for the seller as possible – which means that we will only take listings where the seller is willing to complete the TAR form.

What do you do when another agent has a listing with only the TREC form?  First, if your buyer is making an offer, make the offer contingent upon the seller completing the TAR form.  Show your buyer the TAR form and compare it to the TREC form.  I can’t believe that buyer wouldn’t want as much information as possible.  If the seller is unwilling to complete the TAR form and you’re buyer is willing to move forward with just the TREC form, have them sign the blank TAR form saying that they were made aware of this form and have declined to insist that the seller provide it.  In my opinion, just don’t take no for an answer!

2. Appraisals.  I still seem to fight the notion that the appraisal is covered in the 3rd Party Financing Addendum.  The appraisal is only covered in the FHA and VA portions – not in conventional.  In para 4 of the contract there are TWO levels of approval – Property & Credit.  The appraisal is covered in the Property Approval paragraph.  The buyer’s credit worthiness is covered in the 3rd Party Financing Addendum.  Now, if your buyer is putting more than 20% down, it is possible that the property might come short of the sales price and the lender may still approve the loan.  Lenders like to be at 80% LTV or less and if your buyer is putting 30% down, then the house doesn’t have to fully appraise for the lender to still be within a 80% LTV.  The only way to overcome this is to put an appraisal contingency in Special Provisions or have the appraisal completed inside the Option Period.

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