4 Simple Steps for Buyers: Avoid Real Estate Fraud
Texas Home Buyers May Avoid Becoming Victims of Real Estate Fraud by Following these simple steps:
1. Obtain Written Disclosures Before Making an Offer
Texas law requires Sellers of residential real estate to furnish buyers with a written and signed disclosure of the property’s condition at or prior to the time of closing. Obviously, closing occurs very late in the transaction (as the last step) — after a Buyer has expended substantial time and resources, and after the inspection period has expired. You should request a copy of the property condition disclosures PRIOR TO the time that you make a written offer. Insist that the Disclosures are signed by the Seller, and review them carefully to discover known defects or problems with the property.
2. Get Your Own Inspector and Written Report of Inspection
Even if the Disclosures appear to be “clean,” Buyers should ALWAYS obtain their own licensed inspector to provide them with a written report of inspection. Obtain an Inspection even if not required by a Lender, and even if you believe that you are familiar with the property. An inspection typically costs the Buyer a few hundred dollars, but is well worth the expense. The inspector will identify problem areas which may or may not be known to the Seller. In many cases, the defects would not be noticeable to the untrained eye, or to a casual observer of the property. This is not an area in which Buyers should try to save a few bucks!
3. Use Reasonable Diligence to Conduct Your Own Investigation
Ask lots of questions. Ask neighbors or former occupants (tenants) of the property about known conditions such as floods, fires, and other issues that the property or neighborhood may have experienced. If the area is low-lying, confirm with public records that it is not in the flood zone or otherwise prone to flooding. Check the appraisal District records to see if the Sellers have protested the appraised value in the past. If so, obtain a copy of the materials submitted. Check city permitting records to see what construction or other permits have been pulled on the property. If you know who the Seller’s homeowner’s insurance carrier is, you may even inquire with them about casualty claims. There are plenty of publicly-available documents that provide insight to a property’s history.
4. Insist on Documentation from Prior Repairs
If a Seller discloses (or a Buyer otherwise learns) that the property has undergone repairs, the Buyer should insist on receiving copies of the estimates, invoices, receipts, reports, warranties and other related documentation. Be sure to get the names of the contractors performing the repairs, and contact them if you are inclined to do so. Also, it never hurts to ask for copies of disclosures that the Sellers may have obtained when they purchased the property.
Unscrupulous Sellers are an unfortunate aspect of real estate. However, following the simple steps above mitigate your chances of becoming a victim. Remember — a little bit of time and expense prior to purchasing a property can save Buyers major headaches and expense later.
Of course, involving an experienced real estate lawyer at the beginning of your transaction adds another layer of protection.
If you discover the possible presence of real estate fraud during or after a transaction, and believe that you need legal help, you should immediately contact an experienced real estate lawyer for advice.