Publication Date: Friday, April 24, 2009
When real estate ignorance isn't bliss
Find out as much as possible about your future new home
Sir Francis Bacon said "Knowledge is power." When Megan's List Law created a website from which anyone could look up the location of nearby sex offenders, an uncomfortable stir seeped into neighborhoods and homes.
It is interesting to note that, at the time of this writing, the State Attorney General lists 19 sex offenders living in Palo Alto. Some of these individuals may live remarkably close to your house. The Megan's List Law website shows the "face," address and crime of the offender.
Would it be a good idea to look at this list from time to time, especially if you have young children at home? If you discover something, what do you do with the information once you have it? Would you buy a home in a neighborhood where a sex offender lives? What if it were within four blocks, on the same street, or right next door to your potentially new home?
Standard real estate lease and purchase agreements inform buyers and tenants that the Megan's List Law website exists. However, agents specifically do not have to check the site; they only have to disclose that the site exists while working with a client.
Imagine a buyer in Palo Alto who is about ready to sign a purchase contract and then, in reading the fine print learns of Megan's Law website and says, "Wait a minute. Let's check the Megan's Law database to see what it says about the neighborhood I am buying in."
I can frankly say that in completing hundreds of transactions, I have never heard anyone say this. I guess the opposite of "knowledge is power" is "ignorance is bliss." We are willing to pay lots of money for bliss and readily subscribe to the notion that, "what I don't know can't hurt me."
Google, Facebook, MySpace and other Web sources provide rich fodder for those who do want to know. When buying a home, how much do you want to know about the history of the house? How much do you want to know about the current owner? How much do you want to know about your immediate neighbors?
If you are investing millions or even just a significant portion of your net worth into a house then, if it were me, I would like to know more not less. Is it your agent's responsibility to tell you about resources or to actually do the research? Even if it is not the agent's responsibility, would a "good agent" research the history of the house, the neighbors, and other details such as how much debt is on the property or what other properties the seller owns?
It comes down to a few key questions. Would it make a difference in what you paid for the house, how you might negotiate the transaction, or your desire to own it at all if (1) the next-door neighbor had been convicted of a sex crime (I was involved in a transaction where this type of fact was uncovered during the sale process), (2) the next-door neighbor had revealing and suggestive photos of him or herself on Facebook or MySpace, (3) the owner of the property was a CEO of a successful biotech firm that just went public, (4) the sellers had some past criminal convictions, (5) the owners had tried to sell the house via an Internet website as a for-sale-by-owner for considerably less money last year, (6) you found out the owners just took out a $500,000 second mortgage last month, or (7) a neighbor has made repeated complaints to the police and the city about noise caused by the owners of the property?
If your answer is yes to any of the above hypothetical statements, then before making an offer on a property, you and your agent need to do some homework. Don't rely on the typical real estate agent to do all the research for you. Many brokers advise agents not to look at public records or do Web searches since they may filter the information or may search improperly for data, all of which may be considered negligent if the client was relying on the information provided by the agent as being complete and accurate.
Assignment #1. Find out who the owner(s) are. Google their name and use other online resources to find out all you can about them.
Assignment #2. Google the property address. This can provide varied information from past building permits, old listing information and past crime reports on the property, to a satellite view of the junk in your neighbors' yard.
Assignment #3. Ask your agent to request a property profile from a title company that will provide you with any recorded liens, notice(s) of default or other recorded information. You could research this yourself at the county hall of records, but this can be time consuming.
Assignment #4. Go to the city building department and look at the property file to see building permits and any planning applications made in the past.
Assignment #5. Meet the neighbors. What you learn about the neighborhood from the people who live there might surprise you.
Your objective should be to become better informed than other buyers in order to avoid easily discoverable facts surprising you after the escrow has closed. Are you on Facebook, MySpace, Twitter, LinkedIn or other sites? Real estate transactions used to be completed where the buyer and seller were anonymous, and agents involved in the transaction carefully filtered any information that was provided, editing out anything that the other party might perceive as negative.
Once we start uploading information, we start revealing things that were never part of the equation before. Controlling what you and your agent upload to the Internet can be frustrating. Getting things off the Internet is much more difficult than getting things on the Internet. I am almost afraid to search my own name on Google. I guess sometimes ignorance is bliss.
J. Robert Taylor, J. D., a real estate attorney and broker for more than 20 years, has served as an expert witness and mediator and is on the judicial arbitration panel for Santa Clara County Superior Court. Send questions to Taylor c/o Palo Alto Weekly, P.O. Box 1610, Palo Alto, CA, or via e-mail at firstname.lastname@example.org.