Every home in New York City is unique. Even in the same building along the same line, each home will have its own intricacies, from view, to light, to renovations. Your home will offer a buyer different reasons to fall in love with it than your neighbor’s, and different potential liabilities that could scare a buyer away if not disclosed effectively.
Two Common Mistakes to Avoid
There are two common mistakes I see listing agents make when disclosing a home’s liabilities to a buyer. One is to simply not disclose them, and hope that the buyer’s agent and attorney don’t uncover them either. Or, if they do, that it’s done so late in the process that the buyer goes ahead and goes through with the contract. This is usually worse than if the agent would’ve simply stated the issue upfront. It often causes the buyer to feel like they haven’t been dealt with fairly. They often react more negatively to the issue than they would’ve had it been disclosed upfront. The second mistake I see agents make is to blurt out the issue at first contact. I’ve had agents tell me, before I or the buyer even set foot into the home, that the light is ’bad’, or that the building isn’t financeable. There are several very effective staging options for low light homes that largely mitigate the issue, and there’s always a bank willing to finance a building, regardless of the building’s position. There is a world of difference between “You can’t get a loan in this building… gotta be all cash”, and “Because the building is popular with investors, some of the larger, more conservative lenders can’t loan here. So, I’ve had the building approved by a mortgage broker a have a good relationship with. I’m happy to connect you with them if you’re interested.” Now we’ve taken the correct ethical and strategic step of disclosing the issue early, and aren’t throwing cold water on any interest that could be building.
Not only does this avoid the risk of deals falling apart at the 90 yard line when the buyer finds out from their attorney an unflattering fact about the building, it buys us credibility and trust. If the buyer trusts us, they’re more likely to consider our position more strongly during a negotiation, and more likely to continue the good momentum if an unforeseen issue were to arise during due diligence or a walk-through.
My Personal Experience When Buying my Home
To personalize the issue further, my wife and I are currently in contract on a new development in Brooklyn. During our search, we ended up pulling out of contract negotiation after our offer was accepted, due to having found out an issue with the location that was never disclosed by the listing agent. We’d one a bidding war of 25 offers by tying with the highest offer and being easier to work with (see my post on how to negotiate!), only to find out that a 200 unit building was going to be built on the adjacent lot with construction beginning later in the year. The view overlooking the lot had been digitally rendered in the listing photos, so the intent to hide the issue was clear. Once I discovered it via a google search of the adjacent lot, we pulled out of the contract immediately. While we likely would’ve refrained from making an offer had it been disclosed (my wife was three months pregnant), the listing agent could’ve highlighted how great for the neighborhood the new development would be, and how it would help property values in the long term. They could’ve avoided the stress I’m sure it caused their seller to have to scramble and find a new buyer after having just agreed to our offer, not to mention earned the listing agent much better karma than trying to sneak a couple years of construction next door by a purchaser.