Deciphering Disclosures....

What does the disclosure packet do?

  • The disclosure packet provides insight into the activity/interest in the property.  If buyers are interested in a property and want to uncover more information after they view, the agent will request the “disclosures.”  It’s not a perfect science, however on average the typical conversion from number of disclosures distributed to conversion into offers is about 30-40% however this can vary based on a multitude of factors

Legal stuff…

  • The packet provides a comprehensive overview of the federal, state and local regulations/disclosures involved in buying/selling a home.

How we help you navigate the 250+ pages!!

  • We will review the package with you as it can be overwhelming at first glance since they typically average 250+ pages.  A high percentage of the documents are boiler plate disclosures and once you read and we review once you will have the context.  However, there are key documents that will be unique to each property and these are the documents that justify a deep dive into the content. 

Cut through the Clutter!

Below is a list of the key documents that justify a deep dive:

  • Listing Agent Visual Inspection (AKD - AVID): Both Listing and Buyer’s Agent are responsible for completing an AVID.  The AVID in the listing disclosure package is completed by the Listing Agent. The agent visually inspects the property and notes anything they see or are familiar with pertaining to the property.  This is not a formal inspection nor should it replace an inspection. Once the property is in contract the Buyer’s Agent completes and AVID.

  • Transfer Disclosure Statement (AKA - TDS) & Supplement to the Transfer Disclosure Statement: these are the docs the seller completes which disclose all material facts they know about the property. This is not a formal inspection nor should it replace an inspection.

  • Preliminary Title Report (AKA - Prelim): Verifies owner of record; notes current taxes; identifies if the property has any liens, encumbrances, and easements recorded against property; condo CCR’s are noted and typically hyperlinked along with the condo map showing property boundaries

  • Pre-Sale Inspection Reports: Some sellers will have pre-sale inspections, the most common types are Structural Pest and General Home.  These reports provide a strong overview to the condition of the property prior to submitting an offer, it allows buyers to go in to contract with eyes wide open.

    • Structural Pest Report: Wood Destroying Pest & Organisms Inspection Report.  This is not a pest report for mice/rodents etc., it is to gauge active infestations that can impact the integrity of the structure (beetles, termites etc.) and fungus, dry rot conditions. 

    • General Home Inspection

  • Residential Building Record (AKA – 3R report):  Shows zoning, occupancy use, year built and lists all permit applications on record and current status of the permits

  • Residential Hazards Report & Disclosures: JCP is the firm that produces the majority of the reports here in the city, so a lot of times you will hear the hazards report called “the JCP”.  A key element of the Natural Hazard Disclosure is that it informs if the property is categorized as a Special Flood Area; Area of Potential Flooding; Very High Fire Hazard Severity Zone; Wildland Area that may Contain Substantial Forest Fire Risks and Hazards; Earthquake Fault Zone; Seismic Hazard Zone; Liquefaction Zone– all of which can impact the ability to obtain insurance.  It also outlines additional statutory disclosures and general advisories.  Another key element the report provides is an overview of the property tax, mello-roos taxes and any additional taxes for the property or area.  It also provides a handy tool so you can calculate what the new property tax will be based on the new purchase price.

  • Condo or TIC Docs: There are many documents that fit under this umbrella, I am highlighting the most pertinent docs below:

    • Condo Financial Disclosure Statement: Summary overview of HOA fiscal health, provides current fund balance, identifies if any anticipated assessment is due, notes how HOA is managed (self-managed, in house, management firm)

    • HOA Reserve Study: A reserve study is a study made of all the major capital systems in the association. It evaluates how much life they have left and how much they're likely to cost when they wear out. From that, you can calculate how much money the association has to set aside each year to have enough to replace those items when they do wear out. A common question you will hear your agent ask is “how much in reserves?” which is a great question, but you want to drill down one more level and get a handle on what percentage the reserve study is funded to.  There can be a significant amount of funds in the reserves but if there are large components that are near the end of life, those funds can deplete very quickly and what you are trying to gauge is the probability of an assessment.  The average association funding levels in California is 54%.  The rating scale is based on the risk of needing a special assessment.  0-30% is a weak funding level, 30-70% is mid-range, and anything over 70% is a strong funding position. 

Mary Ann Montano