BUYER'S PURCHASING GUIDE

The offer form most widely used for residential purchases in California is prepared by the staff of attorneys of the California Association of Realtors.  It provides many valuable consumer protections and alerts buyers to their rights and obligations with regard to inspections and investigations regarding the property.  When used, the form also delineates sellers' responsibilities under California law, identifying all of the disclosures a seller must give to purchasers. 

The basic offer form allows a buyer 17 days from acceptance to conduct inspections of the property.  This time period can be modified by agreement.  During this "due diligence" period buyers usually begin by hiring a basic home inspector, and then have other desired or recommended inspections.  However, when a geologic inspection is anticipated, it is wise to schedule that immediately upon acceptance of the offer to be sure it can be accomplished and the report prepared within the allotted number of days.


HOME INSPECTIONS 
                                                

There is no substitute for hiring a qualified home inspector when purchasing real estate, whether residential, commercial or industrial property.  The problem is in identifying a qualified inspector as they are not licensed in the State of California.  Thus choosing one is difficult.  It must be based on other criteria such as their membership in one of the organizations for inspectors (perhaps as one of their instructors), their current licenses in other classifications (e.g. general contractors), and/or recommendations.  

 

Home inspectors cover most systems, structural, mechanical and electrical in a home.  Thus they must have a very broad knowledge base coupled with the experience needed to recognize deficiencies.

 

The home inspector generally conducts the primary overview of the property and recommends other inspections be done when finding conditions that warrant them.  Home inspectors do not check for geologic conditions or hazardous materials present.  They also may limit their inspections beyond these items, so buyers should be prepared to hire additional experts as needed.  Selection of inspectors should be made based upon the inspectors thoroughness and depth of his knowledge. 

                                              

Some categories of inspections that a buyer could find beneficial are listed below. 

GEOLOGIC AND SOILS ENGINEERING INSPECTIONS

Geologists and soils engineers are licensed to perform inspections and do testing to establish the stability of land.  Although hillside properties are the ones that generally cause concern about landslides, flat land can be a subject of concern also in terms of soil stability and may warrant being checked out.  As an example, a dry lake bed can cause problems due to swelling and shrinking that occurs in rainy seasons, especially when top soil has been added on top of the sand base. 

Poor compaction of the fill that underlies a structure can be a source of problems.  In the past, compaction requirements were less stringent and, as a result, settling problems can be found in some older homes. 

 

Soils engineering firms investigate other soil stability issues as well.  Water causes many of the problems that are the purview of soils engineers, including mud flows and erosion that can follow rainstorms.  For these reasons it is wise to investigate site stability.  
 

STRUCTURAL ENGINEERING 

Licensed professionals qualified to conduct inspections and do evaluations concerned with strength and stability of structures, including buildings and retaining walls.

When there are any concerns regarding the strength of a building, or when contemplating a roof replacement with heavier material or addition or change in the structure where original structure is removed, it is best to hire a licensed structural engineer to evaluate the situation.  

Sometimes, as an example, an owner will have replaced a portion of exterior walls with glass doors to enhance their enjoyment of a view.  Unknowingly the owner removed an element (the wall) that was needed for sheer support in case of an earthquake where twisting forces could compromise the support.

Such situations are avoidable when proper Building Department reviews, permits and inspections are done.  Thus when looking at remodeled properties, it is recommended that all building permits be examined. 


ROOF INSPECTIONS & ROOF CERTIFICATIONS

Many home inspectors will not walk on a roof to avoid the liability for damage.  They lean a ladder along the edge of the roof and try to determine its condition from there.  While some indications of the condition of the roof may be evident, other major concerns may not be.  One of these is the condition of the mastic used to seal around flashings, skylights and fireplaces.  Mastic dries out in time and cracks, causing perhaps the major reason for leakage into homes.  It is therefore imperative that this be checked.

Some licensed roofing contractors perform roof inspections and for a fee will offer certifications for a period of years.  During that time if any leaks occur, the contractor will make the repairs without charge.  One important benefit from this contact is knowing someone to call for periodic maintenance.

                                                   

PEST CONTROL (TERMITE) INSPECTIONS

This inspection is commonly requested to evaluate structures for the

presence of termites (dry wood and subterranean) and other wood-boring insects (such as carpenter ants found in some California communities). The inspection also covers fungus infections such as dry rot.  Pest control inspection companies are licensed by the State of California and must file reports to the State Pest Control Board, where they remain on file for public benefit.

 

Changes in the reporting method provide for separation of the report into Section 1 (Active Infestation Items) and Section 2 (Recommended Corrections). Review of the State licensing guidelines is recommended to understand the guarantees provided by licensed pest control operators when they issue a Pest Control Certification (Clearance), which is the document that is provided upon completion of recommendations.   

 

The Structural Pest Control Board can be reached at 1-800-737-8188 for questions or clarifications or by clicking here.

                                                    

ENVIRONMENTAL HAZARDS INSPECTIONS

Licensed inspectors qualified to perform inspections and tests for specific environmental hazards which are identified in the documents buyers receive as a part of their purchase agreement.  Some of the environmental hazards are discussed below.  Some may be relevant in other areas of the country where, for instance, in mining areas that are not of concern in Southern California.  

Asbestos Inspections

Inspections and testing for asbestos materials.  Asbestos is found in our environment having been used widely to control heat within its source.  Therefore we find it along highways, from automotive brakes, and in many older structures as a component in ceiling tiles (remember the ones with the holes---they often contain asbestos), acoustic ceiling materials, floor tiles and rolled flooring materials, wrappings that surround heat ducts and plenum chambers, and even heater exhaust vents themselves!

The material was considered an ideal substance to give added protection against heat---and it was inexpensive.  This resulted in its being widely used. 

It is suggested by some authorities that the material when left undisturbed the presence of asbestos in building materials is not hazardous, but when abraded, shredded, scraped, or otherwise disturbed, asbestos becomes friable and the particles can become airborne.  Then it can become a health hazard, especially when blown through damaged ducting into the home or business setting. 

Some heater ducting has hard metal tubing with asbestos sheathing on the outside.  Other heater ducts are comprised of a thin foil interior and corrugated asbestos material for the structural component.  The latter type is easily crushed when unsuspecting or careless workmen climbing over or under it in making repairs or inspections in attics and crawl spaces.  Then the asbestos becomes friable---capable of becoming airborne.

Under California law collection of asbestos samples for testing and removal of the hazardous material must be done different companies, properly licensed.  California Asbestos Consultants (CAC) are professionals licensed to collect samples.  Asbestos Abatement Contractors are licensed to remove and dispose of asbestos.  They should be approved by Cal-OSHA. 

For more information, click here.

Protective breathing equipment is worn while asbestos is being removed.  It is protected and labeled prior to disposal in a prescribed manner.  After asbestos has been removed, the premises are tested to determine that the air quality is safe for reentry. 

On the contrary, when asbestos is removed illegally (as in scraping acoustic ceilings), the interior air may become contaminated and become a health hazard.  Cleaning the premises can be costly, requiring such techniques as "wet wiping" of every surface in the property! 

To avoid this problem, it is important to test a sample of acoustic material before ceilings are scraped.  Not all rough, acoustic-like ceiling material contains asbestos, but only by testing a small sample in a laboratory can you be sure.

 

Mold Inspections 
Mold can result from water intrusion that is not quickly removed and the area thoroughly dried out.  Some types of mold are classified as significant hazards to the health of occupants.  Thus when evidence of moisture is found during an inspection, the buyer is advised to hire a licensed mold inspection company to conduct a thorough sampling of the suspected areas and testing to identify the types of mold, if any.  

For a discussion of mold, please read the information provided by the Environmental Protection Agency (EPA), click here.  

Controlling moisture is important to prevent mold in the home.  For EPA information on mold prevention click here.

For EPA information on mold remediation click here.

Radon Inspections

Licensed inspectors are available to do testing to satisfy concerns regarding radon gas.  Information on radon can be obtained at  http://www.dhs.ca.gov/ps/ddwem/environmental/radon/radon.htm

The Environmental Protection Agency provides information a http://www.epa.gov/inq/

                                                  

Lead-Based Paint Inspections

Paint manufactured before 1978 may contain lead which has been found to be a health hazard.  It is especially problematic for children living where paint may be peeling or chipping.  As a result, the U.S. Environmental Protection Agency (EPA) has prepared a report entitled "Protect Your Family From Lead in Your Home."  Sellers and landlords must provide this and a disclosure about any lead-based paint known to exist in the residential structure to a buyer or tenant.

The report can be accessed at http://www.epa.gov/iaq/

When desired buyers can have a professional check the property for lead paint.  There are also some testing devices that can be obtained privately.

CITY INSPECTIONS

City inspections or reports by building departments are required in many cities to confirm that property in escrow is in compliance with building permits.  These reports are fee-based, but not all require an on-site inspection.  Some cities require that a buyer acknowledge if he is waiving an on-site inspection.

                                                   

POINT-OF-SALE UPGRADE REQUIREMENTS

Some cities such as Los Angeles require more modifications than State law requires when property is being sold.  These modifications can include water-flow restricting devices, automatic gas earthquake shutoff valves, ultra-low-flush toilets, shatter-proof glass or film coatings on certain doors and windows, etc.  Smoke detectors and water heater strapping are other point-of-sale mandates.

Sellers are required to submit documents verifying that these changes have been made.  Professionals often are hired to provide the certification for the City of Los Angeles and for the escrow holder.

PALOS VERDES HOMES ASSOCIATION INSPECTIONS

Building designs in Palos Verdes Estates and the Miraleste area of Rancho Palos Verdes are controlled by the Palos Verdes Homes Association and Art Jury.  They recommend that buyers of property request sellers to obtain a letter of "completion and compliance" as a condition of purchase.  This letter can only be requested by the property owner as it involves an on-site inspection and the sellers' authorization. 

When such inspections are done, a member of the staff of the Homes Association compared the actual property with the approved plans that are on-file at the Association's office in Malaga Cove.  When discrepancies are discovered, a letter is sent to the seller with discrepancies identified. 

When there are no discrepancies, a letter of completion and compliance is provided. 


SELECTION OF A QUALIFIED PROFESSIONAL REALTOR

The agent you select to handle your home purchase should be well qualified to handle a wide variety of tasks.  These tasks include providing information about the communities being considered, the schools and other factors of concern including area history as it has affected values, also proposed neighborhood and city changes that also could influence the desirability and value of the areas.

The agent should also provide instruction about the purchase process, the documents involved, and the timing considerations and encourage buyers to obtain a letter of pre-approval from a qualified lender that will be included with a purchase offer.  After researching available properties to satisfy the buyers' needs, the review process of visiting probable candidates begins. 

When the property for purchase has been selected, the buyer and agent can begin the process of preparing and negotiating an offer. 

Buyers can expect their real estate agents to review of all documents used in this purchase process as well as explain all contingencies, disclosures, and possible inspections. 

Buyers must rely upon their real estate agent for information and for guidance in formulating the terms of an offer.  The information needed includes selling prices for all recent sales of comparable properties and analysis of recent market trends that are affecting prices, such as the impact of financing changes and the effect of increased competition, as in recent short sales and foreclosures.  

When market trends do not pose a major impact of pricing, the sales of recent comparable properties can be used to indicate a price to offer.  The ratio of asking price to selling price of recent sales can be used to determine how much negotiating or "flex" room to allow in the offered price.  If the seller's motivation is known that also helps in determining the price for an offer.  

Needless to point out, in all markets some properties are just so unique and so desirable that multiple offers will be submitted.  This also occurs when property is listed at a price well below market value.  In these instances the consideration is how high to begin the offer to at least receive a counter offer from the seller!

In such situations, an offer presented by a known real estate agent with a good reputation in the real estate community will have an advantage over offers from lesser known agents.  This occurs because the seller and seller's agent want confidence in the reliability of the buyer and a known and respected Realtor provides an extra measure of strength to an offer presented.  

 

Every aspect of the negotiating process is critical to success.  Buyers benefit from being represented by highly skilled Realtors who know the real estate market, the laws, and the documents that apply.  Their experience also  provides an edge in negotiations. 

 

 

QUALIFICATIONS TO LOOK FOR IN EVALUATING AGENTS

Experience and education are excellent means to evaluate competence among real estate agents.  Some elements to look for include is the agent:

-----Properly licensed and a member of the National Association of Realtors?   


-----Preferably a Licensed Real Estate Broker.  Broker licensing is far more stringent than that of the salesman's license.  Thus it can be expected that a licensed broker will have more knowledge of laws and real estate procedures than salesmen, all of which is to your benefit! 
 

-----Is the agent a Certified Residential Specialist (CRS)?  The CRS designation signifies that the Realtor has satisfied additional education requirements beyond that of the normal license and has met specific experience requirements as well.  Fewer than 5% of real estate licensees nationwide have received this CRS designation, which should not to be confused with company-sponsored certified relocation specialist titles.  


-----Is the agent a qualified buyer's agent (ABR)?  The Accredited Buyers Agent (ABR) designation signifies that the agent has completed a series of instruction on properly representing buyers.   


-----Does the agent have significant experience in selling homes in the area?


-----Is the agent affiliated with a highly respected firm?  This provides you with reliance upon that company's standards of operation and usually continual educational programs for the agents.
 
-----Does the company have nationwide presence?  This assures you of services in other areas, including relocation.


-----Does the agent offer you references from previous clients and permission for you to contact them?


-----Does the agent live in the area in which you are interested.  This would offer you more depth of knowledge about the locale and future referrals to local workmen.

-----Is the agent involved in the Community?  Have the agent's children attended the school, been involved in local sports, etc.  This may provide you with greater depth of area information.

-----Do you relate well to the agent and feel comfortable in requesting assistance and sharing personal information?  


Following this guide you should be able to select a real estate agent who will be a partner in reaching your goals.    

 

 

DISLOSURES TO BE PROVIDED BY THE SELLERS 

California law requires sellers of 1 to 4 units of real estate to make full disclosure to buyers of all known defects and hazards associated with the property being sold.  In addition to the disclosures required of sellers, real estate licensees who are involved in the transaction are duty-bound to make a careful visual inspection of the property and report to the buyers any problems noted.  Among the required disclosures are the following:

                                                  

Real Estate Transfer Disclosure Statement

The real estate transfer disclosure statement, known as a TDS, requires full disclosure of the condition of the property as known to the Seller and/or observed by the agent(s).  This disclosure has a built-in 3-day right of rescission if provided after the acceptance of an offer (or 5 days from the date mailed).  When provided to the buyers prior to final acceptance of an offer, there is no such right of rescission.  Other agreed contingencies are not affected.  

Legal experts recommend that sellers provide their buyers with all information known about the property that could possibly affect the buyers' decision on whether or not to make the purchase, and at what price.  If sellers fail to disclose known conditions, the seller's liability does not end at the close of escrow.  Thus sellers are encouraged to disclose all relevant information.

Seller Property Questionnaire 
Although not required by law, this disclosure is very detailed with specificity that helps to remind sellers of items that might be overlooked without such direct questioning.  It is a valuable supplement to the Transfer Disclosure Statement. 
 

 For additional information on buying a home, click on the

red button "Buying" on the home page