Watch and learn: See how third-party investigative reports transform the marketability of your seller’s property by taking the “what ifs” out of real estate.
In this new video series, we break down how to increase transparency and mitigate risk, ensuring a smoother transaction for both buyers and sellers.
The seller’s strategic investment in transparency
Consider a seller of a single family residence who decides to employ a broker and their agent who are experienced marketing and selling homes in their area. The agent, after initial discussions with the seller, prepares an exclusive seller representation agreement and appropriate addenda for review with the seller. [See RPI Form 102]
Under the terms of employment, the seller agrees to:
- the services the broker performs to market the property;
- the fee the broker expects when earned; and
- obligations of the seller.
As an addendum to the representation agreement, the agent prepares a marketing package cost sheet. [See RPI Form 107]
The agent uses the cost sheet to advise the seller about:
- third-party investigative reports needed to market the property for sale;
- the estimated costs incurred to obtain the reports; and
- the authorization the agent needs to order out the reports.
The cost sheet addendum is the “seller’s budget” for costs they incur to support the agent’s marketing efforts with third-party documentation about the condition of the property for sale.
The marketing package cost sheet itemizes the property reports and sales activities which require cash outlays incurred exclusively for disclosing the condition of the seller’s property. The reports and activities are integral to the agent’s marketing plan to competitively attract buyers to consider acquiring the property.
Third-party reports for buyer evaluation
Third-party property reports put a face on the property enabling a prospective buyer to best evaluate its use and price. A buyer informed by reports about conditions affecting the value of a property and its location is more likely to acquire the property than a comparable property without documentation.
Third-party reports an agent initially considers for inclusion in a marketing package include an:
- occupancy (transfer) certificate to comply with local ordinance;
- natural hazard disclosure (NHD) statement [See RPI Form 314];
- structural pest control report (and possible clearance) [See RPI Form 132];
- home inspection report and seller’s Transfer Disclosure Statement (TDS) [See RPI Forms 130 and 304];
- well water report; and
- septic tank report. [See RPI Form 107]
On the seller’s approval and entry into an exclusive representation agreement, the agent has authority to order out specific property reports from third parties. With the authority, the agent prepares and delivers a request form to each third-party service provider to prepare and deliver their report. [See RPI Form 108]
The reports received by the agent are included in the marketing package the agent assembles and presents to prospective buyers.
The agent advises the seller that upfront disclosures of property conditions avoid negotiations to resolve disputes arising over defects disclosed or discovered after the seller enters into a purchase agreement.
Editor’s note – Stay tuned for our next installment depicting a buyer’s enforceable expectations about property conditions established at the time a purchase agreement is entered into. Don’t miss it!
