Salt Lake homeowners Mark and Linda Rosenfelt learned the hard way what the phrase "Let the buyer beware" means when it comes to buying residential real estate.
"This is my fourth house and I have had problems in the past," said Mark Rosenfelt. "A bad roof, defective plumbing, flooring problems - a lot of things that we didn't find out about until we had moved in. I had to threaten litigation to get them solved, but it still took forever."The Rosenfelts recently sold their present house and will soon be moving into a new one. On both ends, buying and selling, they believe a lot of grief will be avoided through their use of a package of safeguards now being advocated by the Utah Association of Realtors (UAR).
Those safeguards include completion of a property disclosure form by the seller, a professional home inspection arranged and paid for by the buyer, a home warranty policy offered by the seller, and an up-front agreement by both parties to first go to mediation, not litigation, in the event of disputes.
As a buyer, Rosenfelt said he likes the peace of mind that comes from the disclosure of a home's real or potential defects and a homeowner's warranty to back it up.
As a seller, he believes the protections make good marketing tools - reasons for someone to buy his house over another.
"Buyer beware has taught me to be more careful, not only in what I'm buying but what I'm selling," said Rosenfelt. "We are working our tails off to make sure our house is in mint condition for our buyers when they move in."
This is music to Dick Wood's ears. As president of the UAR and owner/broker of Wood Realtors, he has been pushing hard for voluntary implementation by UAR members of the safeguards being taken by the Rosenfelts.
"Buyer beware is changing," said Wood. "In Utah, we haven't gone mandatory yet, but we are strongly recommending voluntary seller disclosure of known defects in homes. We don't want any surprises for buyers."
Wood stressed that seller disclosure needs to be combined with a mediation agreement in which both buyer and seller agree that if a dispute arises between themselves or their agents, they will try to settle it using a professional mediator.
"If they can't, they can still litigate, but mediation is a lot cheaper and quicker and you don't end up with two people hating each other. It's a win-win situation in most cases," said Wood.
Al Mansell, owner/broker of Mansell & Associates and regional vice president for the National Association of Realtors, is so convinced that buyers should know exactly what they are getting before closing the deal that his firm will not accept listings unless the seller agrees to disclosure. If a seller refuses, he says, it probably means they have something to hide.
"We feel it is very difficult for a realtor or buyer to walk through a house and know its inner workings. The people who live in it do know and we want them to disclose those things."
Mansell said refusing to take listings without seller disclosure "is the exception, not the rule" among Utah agencies so far. He estimates that currently only 20 percent of the more than 12,000 real estate licensees in Utah use property disclosure forms.
"Consumers need to know that if their real estate agent is not offering them the option of signing a Sellers Disclosure Form, they are not receiving the level of service to which they are entitled when they use an agent to sell their property," said Mansell. Others agree and are taking up the cause. Among them is Coldwell Banker Premier.
R. Scott Webber, president of CB Premier, said written disclosure describes aspects of the property that could affect opinions as to its value but are not readily observable, such as flood conditions, drainage problems, additions and remodels, presence of toxic substances such as radon gas and asbestos, plumbing, heating and roofing and pending legal disputes involving the property.
Mansell said the need for seller disclosure has risen from home purchasers asserting legal claims against sellers and real estate agents. These involve allegations of misrepresentation, negligence or fraud. Most could have been avoided with a signed Seller's Property Disclosure form, he said.
Mansell said sellers are not expected to be all-knowing when it comes to their property, thus the disclosure form has a box marked "Do Not Know."
"Many people have no idea what the R factor is for their attic insulation. Also, if they didn't paint the house they wouldn't know if lead paint was used. They also may not know if there is radon, hazardous waste or geological hazard on the property. Basically, it just give buyers a chance to see if there are any red flags they want to look into before buying the home."
Since his firm began requiring the form as a condition to taking a listing, Mansell said only one seller has refused.
The National Association of Realtors reports that disclosure is currently mandatory only in California and Maine but 18 other states are expected to legislate for such laws in their 1992-93 legislative sessions. Utah currently has no legislation drafted to make seller disclosure mandatory.
Seller disclosure forms are available from the Utah Association of Realtors, 5710 S. Green St., Murray, UT 84123.