Publishing > Advanced RE Buying 101 > Chapter 1

Welcome to Advanced Real Estate Buying 101.  Publishing started on this on 2/26/2022 and is ongoing.  Prepare for a fast and toxic slide into a deep and dark rabbit hole known to those in the industry for a very long time.  You are about to learn Open Secrets of Real Estate Brokerage that have been well concealed for decades.  

• Introduction
• Scenario Summary
• The Pre-Sale Home Inspection - A Nightmare in Disguise?  412M in omissions in a 25 year career?​​

Introduction

It was March 2021. We needed a home.  We had been looking for 6 months. We were being pushed out of our rental as COVID was raging.  The rental market had doubled in price. Homes for sale were jumping by 10% per month. What was satisfactory and easily within our price range in either market had recently jumped out of our comfortable zone. Everything was getting more complex and more costly by the month. 

We found a home for sale that was a good fit from a size and location perspective. It was at the tippy top of our price range, and it was over priced for location and condition as evident by not going under contract right away,  It also  had some complex features and easily visible issues that would reduce the prospective buyer pool. 

Prior to writing a contract to purchase we had several concerns about the way the listing was being handled and a lack of transparency with disclosure documents.

We made an offer and ratified the contract on 4/1/2021 without proper disclosure documents to preview prior, as is allowed in Monterey County, but not surrounding counties.  One of the pre-ratification disclosure documents we were provided was a Pre-Sale Home Inspection. It was oddly "missing a few key items" and the writing contained in it was excessively suggestive and confusing.  Extremely unusual for a Home Inspection report and very concerning given that inspector claimed to have done over 10,000 inspection in Monterey County since 1998.  It begged us to ask ourselves the question.  Were these guys running a scam that was as big and bad as it appeared to be on the surface?

The day after ratification, we received statutory disclosure documents which should have, by courtesy, been given prior.  We discovered 3 out of 3 statuary disclosure documents to be patently incomplete. Each was missing critical information.  In addition, some of the disclosures were known to be patently false from dialogue had with the Seller's Agent days before making an offer. 

Speaking in layman's terms here, not legalese, the day after ratification we were looking at disclosure documents with what we knew for fact to be fraudulent statements from the Seller based on dialogue with the Seller's Agent prior to ratification AND we knew the Seller's Agent would have known them to have been fraudulent at time of presentation because he's the one who provided us with the facts to know they were fraudulent to start with.  Nothing like starting out a real estate transaction staring conspiracy to commit fraud square in the face. 

As an experienced agent in another state who has purchased approximately 20 homes for my own development purposes, I was beyond pissed but I held it in.  We needed a home to live in. We were in a stressful situation, and the entire market place was toxic.  We were going to get hammered one way or another and this was the only thing we'd seen that fit our true location and footprint needs in 6 months that wasn't attracting 3 to 20 bids in the first 3 days. 

We were prepared to deal with a pricing issue. What we got was a game of Horse Trading under guise of Brokerage.  

There is only one way to play with players. We sucked the loose lipped Seller's Agent for information he should never have shared for the first week to ten days. Then we started making demands for information that were well within our rights as the lawful buyer.   Once he realized what was going on, he did all he could to try to get us to exit the transaction.  He clearly didn't recognize the pickle we were in when we met, nor did he realize the pickle Barrell he had created with his own behavior and those he brought into the transaction until later.  

Eventually we got documents from them via a demand they couldn't side step.  As soon as we got those, the seller demanded we remove our condition contingency while simultaneously refusing to provide a completed Statutory disclosure document that should have been completed and reviewed by Brokerage Oversight before the listing ever hit MLS. 

We had a decision to make.  Stay in the transaction by signing a document that superficially granted them immunity from negligence and fraud OR walk away, and start the process again in a market that was toxic from top to bottom, inside and out.  In late April 2021 we removed our condition contingency under duress. 

On May 15, 2021 we closed escrow on a new home in Monterey County CA. ​

The Seller and Seller's Agent may have felt they had completed a mini-mob game with success. They most certainly seemed to know from the get go how to use the system's slant to try to maximize profits and legal protection. 

We were battered and abused.

We knew the civil system wouldn't provide any simple economic remedies, but we continued to try to view this as a glass half full proposition. If nothing else, we had been handed a potential Pulitzer Prize winning Investigative Journalism opportunity, and By George, we're in pursuit of that now, come Hell or High Water. 

We uncovered another world of information after moving in and verified concerns raised but glossed over and unadmitted by the seller and his agent prior.   We've been managing the situation as best we could since our settlement date, but we still have much work to do.  

The volume of negligent and fraudulent issues in this transaction is mind numbing. If there isn't criminal behavior in here one way or a couple, Elmer Fudd has finally won. 

With a request for just two, simple emails,  we may be able to prove the Seller's Agent was fully fabricating responses for the Seller, but that's just one of a dozen threads that can be pulled on with minimal effort. 

Lemonade comes from Lemons. With this offering we hope to quench the thirst of millions of real estate readers who have been starving for something better for decades.   Thank goodness the Marketeers have spent the last two decades pulling them from the woodwork.  It makes them an easier audience to target now for sure. It's all clearly one giant ball of gnarach yarn now, and hopefully this will help unwind it.   (Word of the day is gnarach. That's "gnarly" in Gaelic and about the place we ought to start...)

What you all will get now is one Hell of a Hot Case Study.   
Welcome to Advanced Real Estate Buying 101.  

​

Scenario Summary

1967 - The home we were interested in was originally built in 1967.  It had been owned by the original owners until 2015 when the Seller we bought it from purchased it. ​ At the time of his purchase, it was in need of a lot of repairs. 

2015 - The Seller bought it with visions of renovation in mind, but he got in way over his head, by his own admission and that of his Seller's Agent later in our transaction.  The seller had made cosmetic home upgrades during his ownership, but parts of the home that were in fair condition when he purchased were damaged during his occupancy as well. 

2020 - During the first year of the COVID storm, the Seller, a Mechanical Engineering Manger at a Hi Tech Biomedical Company in Silicon Valley was on remote work. He and his spouse decided it was time to sell and move to the Mid West where he could commute back as needed. 

However, they had major problems related to home condition. 

• The rotten wrap around deck that was falling off the home when they bought it was still hanging on by a thread. 
• Some type of water event had transpired that had badly damaged the 1st floor utility room and/or bathroom area. Some plumbing was repaired, but the cosmetic work required to put it back together had not been done and the damaged material had seemingly sat generally unrepaired for some period of time 
• .A rodent invasion in the attic during their occupancy had ruined 1000sf of insulation and caused staining in 300 to 400 sf of the 2nd floor ceiling 
• A water event in the dining room after their new hard wood floors had been installed had caused hardwood floor cupping and seems to have lead to the destruction of insulation directly underneath it in the crawl space
• The side yard seemingly had major drainage issues that had been persisting since the prior owners
• Fire and safety hazards related to pilot light height for the furnace and water heater in the garage had never been remedied
• Red Wood siding on the upper half of the south facing wall above the rotten deck was well beyond it's life. 
• The water damage all over the garage south wall from the rotten deck and siding beyond its life on that wall would raise major concerns about the potential for mold damage in that area
• As Cat lovers, they seemed to have had major problems managing the urination areas for 6 to 9 cats they had during the entire duration of their occupancy...
• and more... ​

The Seller and Seller's Agent knew each other through Church.  They seemed to only have been acquaintances when the Seller approached the Seller's Agent asking for a review of his home and assistance with the sale. As conveyed by the Seller's Agent, the Seller's Wife was seemingly concerned about having the Seller's Agent over due to the condition of their home, but the Seller insisted because  "they needed help" (as conveyed by the Seller's Agent as the transaction was getting unwieldy). 

The Seller's Agent made one or several visits to the home at the Seller's request. The number of visits made prior to entering into an agreement is still unclear at this time. Then they came to an agreement. 

​The Seller and his family needed to move out of the home to prepare it for sale. The Seller's Agent would take over full responsibility for property management in the Seller's Absence.

• In addition, the Seller's Agent would recommend a General Contractor and other service providers to do the work needed to get the home ready for sale AND the Seller's Agent also agreed to be responsible for overseeing that work on the Seller's behalf.
  
• In addition, the Seller's Agent and his wife would do some of the deep cleaning required and they would sub other cleaning out to get the job done.  
  
• In addition, the Seller's Agent would suggest a Pre-sale Home Inspector and a Pre-Sale Termite inspector for preparation of supplemental disclosure documents and he would be there to meet those inspectors on the sellers behalf as well. 

Fees exchanged for these management services, cleaning services and subcontracting services have not been revealed yet. 

With that agreement in place, the Seller and his family moved out of state in July 2020, 10 months prior to listing the home. He never returned to the property. 

From July 2020 through November 2020, approximately $50,000 in work was done by the General Contractor and other subs, who were all overseen by the Seller's Agent.  Much of the work was agreed to directly between the Contractors and the seller, but some lesser work was clearly done at the Seller's Agent's direction without prior approval of the Seller too.

And this is where this story turns grim quickly. During that time...

• The Seller's Agent oversaw structural work done without permits that was not disclosed
  
• The Seller's Agent oversaw the cover up / concealment of structural defects.
  
• The Seller's Agent oversaw the cover up of Mold.
  
• The Seller's Agent participating in the cleaning of the home in a manner that masked tremendous cat urine damage...
• and more...
  
  

And it gets "better"...

• The "trusted Church going acquaintance" who suggested the General Contractor to the Seller also seems to have approved payment for work that was never done or not done per the quotes provided to the seller too...
• Saying this another way., documents reveal lesser work or no work was done for some items than were quoted and charged for, so in that sense the Seller's Agent and General Contractor were cheating the Seller out of money while also covering up defects for him that would save him money but put them all squarely inside a circle of conspiracy that is gnarly by any standards. . 

​
During the pre-ratification showings I noticed "imbalances" in home presentation, so we asked to meet the Seller's Agent after the 2nd showing. During that conversation I/we gained information that indicated he/his seller would have serious disclosure requirements to make related to structural modifications and work done to prepare the home for sale. From that first conversation I realized that the work done to prepare the home for sale could have involved concealment of structural defects related to the side wall.  

During the showings and before the offer, the agent kept promising disclosure docs but not delivering the statutory ones, as is oddly allowed in Monterey County and not surrounding counties.  A pre-sale home inspection was provided as a pre-offer disclosure. Unfortunately it was filled with $50,000 to $100,000 in relevant omissions. That inspector and his son was referred to the Seller by the Seller's Agent and the Seller's Agent was the only person there with them at the inspection.  The inspector is apparently one commonly used by many agents in the Seller's Agent's office. The inspector claims to have done 11,000 inspections in Monterey County since 1998. The inspectors college degree is in Speech and the shear volume of written and visual suggestion, misdirection, omissions and confusion in that report is gobsmacking.   

The day AFTER contract ratification, 3 out of 3 statutory disclosure docs were delivered patently INCOMPLETE. Signatures missing, answers to questions related to flood and molding missing, a confirmation from the sellers agent on yes or no to additional disclosures was missing .  At that point, we already knew he and his client had far more to disclose than they had simply based on a few pre-contract conversations.  A level of fraud or gross negligence was nearly dripping from the pages.

The disclosures had seemingly been written for marketing purposes as opposed to proper disclosure purposes and they were filled with false statements and omissions by both the Seller's Agent and Seller.  

The Seller's Agent and Seller seemed to be pursuing a  game of horse trading under guise of brokerage with zero broker oversight. 

1. They seemed to be looking for a "mark" to buy the home who had a buyers agent who would be willing to under represent or look the other way on incomplete disclosures
2. The seemed to be looking for a "mark" to buy the home who had no proper representation
3. They seemed to be looking for someone who was going to tear apart the home from the get go, who simultaneously wouldn't care about their false statements and omissions.   
   
   We had no intentions of tearing apart the home upon move in. In fact it was quite the opposite. We have the skills to do that if needed and we were in a really tight housing jamb ourselves but that was never our intention nor was it in our budget.  We probably looked enough like #1 and/or #3 from the get go to get into their game, when we were neither, in fact. 
   
   

The really big questions you need to ask now are simple. 

1. Why did the Agent feel he was going to get away with presenting 3 out of 3 statutory disclosures incomplete to start with?
2. If his brokerage had any type of QC on documents, that would never fly? How did he know there would be no Broker oversight on his end?
3. Worse yet, why would he think that no other Broker who represented a Buyer might not call a foul? 
   
4. Could they ALL be in on a secret together that is outside the purview of the buyers some  claim to help?   

This is the open secret you need to focus on first.  From there, you can climb even higher into the Broker's lap, then into the California Association of Realtors lap ( CAR's lap) and then into the National Association of Realtors lap (NAR's lap).  From there you can also climb down into the laps of the General Contractor, the Pre-sale Home Inspector, the Pre-sale termite inspector and the Transaction Coordinator.  Finally you can fully explore the lap of the Seller's Agent, and then end your search in the lap of the Seller. The man who knew about all the problems with his home and the man who paid a very hefty price to others to make it look habitable when it was not. 

The market is beyond toxic at the Brokerage level and it's on both sides of the ball.  That is one reason why we completed the transaction. We had seen problems with other homes and other seller's agents as well,  and there was no reason to believe we'd ever be competitive on a home that also had  honest brokers and agents involved. 

At day 22 in the transaction I forced invoices and emails out of them. I can be extremely intimidating in writing when I need to be. From those we figured out much of what was presented above. We also figured out all major work was done on the home by November 2020, yet the home was not listed for sale until March 2021.  Rainy season here starts in November and ends in March. 

 Around day 26 the seller issued a demand to  remove condition contingencies while simultaneously ignoring our demand for a completed Seller Property Questionnaire with answers to the questions related to Mold and Property flooding completed and that document can be found in an incomplete manner today in the Broker's Document Packet.  There only logical defense will be a claim that they are not obligated to provide completed Statuary disclosures to Buyers.  It will make for an interesting defense indeed. 

​The Pre-Sale Home Inspection - A Nightmare Disguise?

The MOST CRITICAL service you will buy as a potential home buyer is a Home Inspection.  If at all possible, try to get one from someone who has a lot of prior building background and/or other income coming into their household other than via their home inspection business.

Unfortunately, Home Inspectors who rely on Real Estate Agent Referrals have one of the largest and most relevant conflicts of interest going today in commerce. Maybe even more so than Doctors, if risk of death is factored in.  Sound odd?

Take a look at the numbers and try to come up with any other small business trade where a half BILLION DOLLARs in damages could possibly rack up unnoticed while providing services to "happy customers" $500 at  a time.  

CONTINUE TO CHAPTER 2....​