For Buyers: The Importance of Meeting Neighbors When You Are in Contract on a Property.

As part of the due diligence process of investigating a property and neighborhood, I recommend to my buyer clients once they are in contract on a property or prior to submitting an offer, that we go door to door to meet a few neighbors. This is a great way to get a neighbor’s perspective (sometimes a mix of opinion & fact) on the neighborhood, details which even the seller may not be aware of and has not indicated in the disclosure packet.

This becomes even more important when dealing with REO’s (real estate owned: properties that have been foreclosed on & which are now bank owned). Since the bank has never lived at the property, disclosures are very limited and/or they are exempt from filling out certain disclosures.

Neighbors, especially if they’ve been long term residents, can share invaluable information including: how the area responds in heavy rains, is there flooding in particular spots of the block? Are there any noise nuisances? How do they like the neighborhood? How are the schools? (if they have kids, of course) And what planned city projects are being proposed but are not yet approved?

To illustrate the gems that can be uncovered, I was working with first-time buyers this summer who were in contract on a single family home. I knew from the “light” seller disclosure responses to certain questions on the Transfer Disclosure Statement (TDS: a form with dozens of questions that a seller is required to answer to the best of their knowledge) that we were dealing with both a seller and agent who weren’t paying enough attention to the importance of spending the time required to accurately fill out the TDS fully.

The house was on a busy street, actually a main thorough fair to Highway 101 and was also less than a block away from a business/commercial district, TDS questions to which the seller responded in the negative. There were several other issues we were having with the seller which were revealed as we moved through the inspections.

One neighbor that we met told us that in the front yard of the subject property there was a bubbling of liquid that had been occurring for several months. I am aware that there can be ulterior motives to responses that one may gain from neighbors, but I feel that overall they’ve been spot on with the sharing of information!

The particular area that he pointed out had fresh bark laid down; upon a slight pulling back of the weed fabric, we discovered that someone had stuffed a rag into what turned out to be a sewer clean out. I had already recommended to my buyers to have the sewer line videoed. The plumber now had another access point to the sewer line which turned out needing complete replacement to the tune of more than $6000.00! My clients ended up walking from this property after we reached a standpoint in negotiating a credit from the seller for over $20,000.00 in repairs that the inspections revealed.

This particular recommendation to meet neighbors is a result of my personal experience with a real estate purchase (prior to my becoming a licensed Realtor) that went sideways after escrow closed (resulted in litigation due to inaccurate disclosures by both the sellers and the brokerage).

I sure wish I either had been working with an agent who made this recommendation of meeting neighbors or that I had thought of it myself because I would not have bought my current house if I’d known about the major overpass project that was to commence in the near future (turns out our neighbors were aware of this project) or the two underground fuel storage tanks that we located under the driveway, both details which the sellers “forgot” to disclose.

An invaluable learning experience of the process of dealing with dishonest sellers, incompetent agents (both listing and buyer’s agents), and how the mediation/arbitration process can be incredibly slow (it’s not fun paying legal bills for 3+ years).

I think & hope for the most part that sellers and agents try to do the right thing. I’m certainly not looking for a smoking gun; rather, I am being incredibly thorough in helping my buyer clients learn as much as possible about a property and the neighborhood.

Everything happens for a reason and I choose to focus on how this personal experience helps me be an above average Realtor who diligently & tirelessly works to protect clients (both buyers and sellers) from legal exposure.

In the words of my first broker manager, “buyers forgive what is told and sue for what is not disclosed.” So true! The leading cause of disputes between buyers and sellers is for lack of proper disclosure about a property and the community.