Meet Anthony Wong, one of the real estate agents at Haylen Group working alongside industry leader Helen Chong. Anthony started working with the Haylen Team when he was still in college. Watch a short video to see his story in the real estate industry.
Anthony specializes in helping young families make informed decisions throughout the entire home buying process. Buying a home can prove to be quite challenging, especially for first time home buyers. For example, the documents included in the disclosure package and inspection reports can be overwhelming, but Anthony is committed to providing his skills to make the experience as informative and smooth as possible. He has answered some common questions in this interview regarding the disclosure package and inspection reports to help you navigate through this process. You can also read the interview below!
Helen: I know one big part of your job working with the client is that you take reviewing disclosure and inspection reports to another level. You’re really careful about, you know, let’s figure out what we are buying first. So can you talk a little bit about what are disclosures, what are inspection reports, and why are they so important?
Anthony: Disclosures and inspection reports are part of a disclosure package, typically it’s something that the seller and the seller’s agent prepare. The disclosures can be a variety of documents that the seller fills out, and it basically details what they know and don’t know of the property. The inspection reports are done by a third party, they come in the seller’s home, do the inspections, and point out what is wrong, or is there a specific defect that you should be worried about. Those are what disclosures and inspect reports are.
As far as why they’re important, from a buyer’s perspective, it kind of gives you a bigger picture of what the property is like. For example, disclosures are very detailed, you know, disclosures go from this property has sprinklers, does it have smoke detectors, does it have washer and dryer, is the owner occupying the property, and also goes into details like what was the last time I remodeled this house, was there a leak somewhere, when was it fixed, what dates, was it done with or without permits, so and so on. There is a lot of effort that goes into this that refines a lot of details for a potential buyer. Then I feel that inspection reports are the most important because it’s done by a third party. I would hope there’s no bias or something like that, but it shows what they found – maybe there’s a leak, or maybe the roof needs replacing, so there’s a lot of information that the buyer needs to know to equip themselves with knowledge for putting an offer. Then from the seller’s side, it shows transparency, if you provide all information upfront, then people would feel that – okay, the seller is not hiding anything from me, you know, everything’s trustworthy. So that’s why it’s important for both sides to have this done.
Helen: Which documents should buyers particularly pay more attention to when they’re looking through a disclosure package? Or which would be the ones that you would say – let’s really dig into it a little bit more on this particular document or these few documents?
Anthony: You know, there is the Transfer Disclosure Statement, there is AVID (Agent Visual Inspection Disclosure), there is the Seller Property Questionnaire, as well as all the most general inspection. There are a lot of different inspection reports, but the most general one you would find is the home inspection, pest, and also roof inspection. I think those are the most important. As for the disclosure side, because it’s everything the seller knows, if the seller has been living there for a while, it’ll tell you exactly what you should look out for.
I would say the more one of the more important ones is probably the Seller Property Questionnaire. It tells you when was it updated, what was updated, permits, licensed professional or not. It lists everything out, so these things are very important for first-time homebuyers as well as investors looking to buy something to rent out.
Another thing that I think a lot of people don’t think is important or even I myself, in the beginning, might miss is the prelim. That’s very important because it might say there’s an easement for so-and-so, you might be sharing this driver with a neighbor, or a utility company has to access to a certain portion of your lot, so that’s very important to know.
Then home inspection is very important, and I also feel that pest inspection is very important. They are separated into two important sections. Section 1 includes items that you should do as soon as possible, and section 2 are things like – just a warning, maybe you should fix it later. The termite inspection is important because it’s a lot of hidden cost people might not know, especially if there’s dry rot, you have to replace sidings or whatnot. It’s also important because usually a lot of pest inspection reports have a page where it details the cost of every item that they’ll bid for or give you an estimate. I think that’s important because first-time homebuyers might not know – is this cost to fix something for the age of this home normal? Is it the case for a lot of different properties or is it a real special case where this is extremely expensive? I think it’s something important to know.
The roof is also very important because, you know, that’s the only thing keeping water from coming into your house, and it’s also very expensive to replace, so it’s good to know. If my roof is new, that’s awesome, or if you buy this house, five or ten years down the line you have to have a budget to have it replaced or to have it repaired, so those I feel like are usually the most important.
Helen: When we are reviewing the disclosure, how do you think that these documents can affect the buyers’ decision when they’re purchasing a property?
Anthony: You know, before COVID happened, a lot of transactions or offers were made with no contingencies. Contingencies are basically loan appraisal and inspection, and it was very common here in the Bay Area. It’s like – hey I don’t care what the condition of the house is, I just want to buy it the way it is, I don’t care. But then let’s say now how it affects the transaction. For example, if you’re a buyer and you look at the inspection reports and there’s a foundation issue. The thing is, for home inspectors, they’re only limited to a visual inspection. They are not like a structural engineer or tell you how much it would cost. So say I’m a buyer and I’m not very comfortable, what can I do? Then as a seller, if you’re looking for no contingencies offers, but your property has this issue, then maybe you will start getting offers like – oh I’m continued to inspection contingency, you know, I want to make sure that the foundation is okay before we actually pursue the transaction or some items like that.
Helen: How important it is for you to actually go over these disclosures with the clients? Because we’ve both heard some clients say – well, when I purchased the other property, nobody ever went through the disclosures with me. So how do you think that this is really important?
Anthony: I think it’s important because it’s difficult to make a really informed decision without looking at all the information that’s available. Let’s say if you’re a first-time homebuyer, or maybe an experienced buyer that never really went through this. What would you do if an unexpected cost came up and you never knew about it, or you didn’t budget for it? You know, home maintenance and homeownership, especially in the Bay Area, is very expensive. So it’s a good idea to budget out and to have reasonable expectations on what’s going to happen later down the line. If you’re going to live there for a long time, and it’s good to know. Or let’s say if you want to sell in a couple of years, but you didn’t know that your roof was near the end of its life, and then when you are trying to sell it, then it could be a huge impact on whether the buyers are going to buy your property now when you go ahead and sell in the market, so I feel like it’s very important to know. Personally, I mean, even anything in my life, it is important to know everything before you make a decision.
I would say if you’re a buyer and you might think – oh man there’s so much information, it’s such a nuisance. You know, going over it for a few days is better than not knowing anything that might happen to your house in the future. So, you know, spare a couple of hours looking over it will actually be beneficial for you in the long run.
Helen: Yeah, for buyers if they are trying to look at these documents themselves, it might take more than an hour, but you always go over the whole disclosure with them on the phone and sometimes over an hour just to go over all the disclosure and making sure that they’re comfortable before they make that decision, and how we structure that offer. Also, besides the disclosure like you mentioned earlier, the easement is also important. If you didn’t know anything about the easement of this property until you were trying to sell it – wait I didn’t know there’s an easement right across my backyard all this time, and now I’m to sell it and realize that you cannot sell it as high of a price as you thought, so that’s why it’s so important.
Now, besides the disclosures, what other questions would you ask a seller’s agent? Because especially with you, even during your first two years of real estate career, you actually got quite a few of your deals locked down before the offer deadline, or even maybe off-market.
Anthony: The first thing that is very important to ask is the offer deadline. It’s good to know how much time you have, as well as for your clients to prepare an offer and to discuss everything, so it’s very important to know the offer deadline.
Also, we don’t just ask for disclosures just for the information of the property. Disclosures are not something people want to do for fun, but you know it’s mandatory, you need to do it, and it’s a lot of pages. People only ask the agents for it if they’re serious about making an offer. So what we can do is ask the seller’s agent how many disclosures they sent out, it kind of gives us an opportunity to gauge the interest of the property. Of course, if there’s a property and there are like 30 disclosures sent out, it’s not 30 people are going to make an offer, but it gives you an idea – okay, this is a very popular property right now on the market, there are people looking, and people will be making offers. Of course, there’s a lot of other stuff that goes into determining that, but that’s one factor that we consider.
Another thing that we can ask seller’s agent is the seller’s expectations, you know, is there a minimum they’re looking to get? Not asking to low ball, but is there a minimum they’re looking to get before they consider an offer. You don’t want to just submit an offer, and then the seller just feels – it’s just low balling, I’m not even gonna counter that offer. So you want to ask to make sure you can get in a position where the seller will consider, and also potentially give you a counter, give you a chance, let’s say if there are a bunch of offers and it’s some bidding situation, you know, that’s very important.
I guess everything else asked would be determined by disclosures, like if there’s information I need to be clarified.
Helen: When you ask the seller what is the minimum they are expecting, but sometimes their minimum might be really high, so how to decide on the offer price for the client?
Anthony: You know, there are times where the sellers’ expectations are very unreasonable. In that case, I would attempt to talk to the listing agent first. Oftentimes, I guess sellers have an expectation, but it takes time for them to realize that the market is not bringing that price before they lower it. Let’s say when you’re not in a situation where they lower it, then the number one thing that we do is do our homework. We look at past comps, and we compare properties that are similar, square footage-wise and condition-wise, to come up with a value that we think is reasonable. Let’s say, two months ago there was a very similar property sold for X amount, so considering the upgrades or no upgrades, we think it’s worth this price. we can present that information to the listing agent, and see if they’re willing to present it to the seller, and just start conversations to see if you can get some middle ground, and to kind of get something conversation going.
Besides doing our homework, we also consider the inspection and disclosure reports, you know, what potential damages, repairs, or maintenance items need to be considered. Then we can factor that in, like if there is a foundation issue that might cost $100,000 or whatever it might cost, and you can factor it into our offer price. We can’t offer you a price that a normal home will be selling for, if we have a home right now that has the foundation issue, that doesn’t make sense, you know. Then our buyers would be overpaying because they still have to pay for repairs.
Let’s say upgrades, if the house is not upgraded. Typically, to upgrade a moderate bathroom would be about $10,000 – $15,000. If they need to update the kitchen, the bathroom, or there are a lot of exterior issues that need to be addressed, then we factor in everything before we come up with a value.
Besides that, there’s also the sold-to-list percentage that we look at. Sold-to-list percentage is something we look at outside of just price per square foot, it basically tells in this specific area or neighborhood, how much are people offering over the asking price. Let’s say in a neighborhood where the average sold-to-list percentage is 103%, then you know that on average people are offering 3% over the asking price. Or let’s say on average it’s 97%, then people are actually offering under, and they might be listing a little too high. We also looked at days on market. It’s listing at this price but it was on the market for less than three days, or maybe it was on the market for 100 something days, and you know obviously, they might have priced it wrong. There are a lot of factors that go into it, and this is just one example.
We also look at the most recent comps, we don’t look at anything that’s a year ago. We usually try to find comps of homes sold in the last three months, six months is pushing it. Ideally, you want something from the past two, three months, then it’s the most recent. It shows where the market is heading in terms of offer price.
Helen: Yeah, the offer pattern is actually really important. People always do market updates, and we might say that these counties combined have an average of people making offers 5% over. But at the same time, every neighborhood has different pockets, so there would be certain pockets of certain areas where most people actually offered below asking price. Just because it is a hot market, it doesn’t mean that every single pocket, every single neighborhood, is a hot neighborhood, and then you kind of see what is the offer pattern over there, and then we can advise the clients accordingly.
So what happens, let’s say from your experience, if the buyers are not happy with the inspection reports, or not happy with the disclosure? What can they do?
Anthony: It’s most important to express your concerns, and talk to the listing agent first. Maybe they can clarify whatever concerns you as a buyer have because I don’t think every agent, every seller out there is trying to screw someone over, they are trying their best to represent the property. Some owners have been in the house for many many years, you know, there is sentimental value. Usually, in listings that have everything prepared already once they list it, you know they’re very organized, they have everything done. Those people are agents, they’re on top of the game, they know what they’re doing, so usually, it’s more or less reliable. But let’s say you talked to the seller and the seller’s agent, if you’re still not very comfortable, then you can put an inspection contingency on your offer, and then find a third party on your side to do the inspection for you and to double-check on something. Maybe there’s a foundation issue like we mentioned earlier, maybe get someone that’s qualified to actually inspect the foundation and give you an estimate on how much it will cost before you remove that contingency. Or let’s say the seller has unreasonable expectations for the offer price, let’s say you could swing it, you can afford it, but I still think it’s important for the appraisal contingency just in case it doesn’t appraise that high, at least you know that you have something to negotiate.
Helen: And even sometimes the market is really hot, and they say – oh well, every offer is no contingency anyways. But if our buyer is not satisfied with the inspection and disclosure reports, it doesn’t mean that we’re gonna go in with no contingency.
Anthony: I don’t think it’s right to push buyers to do a no contingency offer, even though that’s a norm here in the Bay Area, because ultimately it’s not our money that we’re spending, we’re not even spending the money for them, we’re just consulting them to make the decision. I always say it’s clients’ best interest first, even if they don’t care, but let’s say you know there’s something that will affect them later down the line, I think it’s still best to bring it up, and then have them consider it. At least you brought it up and raise awareness to that concern that you personally have to your clients, and after that, it is really up to them to decide, but at least you know you did your part in informing them.
Helen: Absolutely, and we always talk about this, too. I know we have a salesperson license, but we’re really not selling the property, we’re consulting our clients to see if this is the right property for them, the right home for them. You know, that’s why I love working with you. We are all on the same page, the way we make sure that our clients are being taken care of is truly the most important thing in our career right now. To give them the chance to really enjoy this property that they are going to buy, they are going to own, so that they can enjoy it and have a good memory.
Anthony: I mean if I didn’t do anything that I mentioned before, I don’t think I’d be able to sleep at night. To be honest, like I could potentially screw someone over because I didn’t do X and Y, I would not do sleep at night. But tedious work aside, it’s a pretty fun profession. There are a lot of unexpected issues that come up, nothing is planned. Almost every time, you know, even though it looks perfect, something will pop up, and it can test you as a person and your problem-solving abilities.
Helen: Yeah, I always say in real estate, we are consultants and also problem solvers. If there’s a transaction that doesn’t have issues, you’ll be like – what’s going on? Did I miss something? You are always ready to solve the problem. When I first started 15 years ago, every time there’s some problem I will report back to the client right away. Later I realized that I should solve it first before I bring it to the client, unless I cannot solve it somehow, but yeah, our profession is actually acting as a problem solver.
We hope the answers from Anthony have helped you learn about the disclosure package and inspection reports, feel free to reach out at [email protected], he would be more than happy to assist you during your home buying process.