Tear-Down? Never Mind about the Disclosures
In my July 26 post, “Too Good to Be True,” I discussed (briefly) whether a Seller who overstates their home’s square feet can be sued by a Buyer. In addition to the “reliance” hurdle, there’s another possible “out”: a misrepresentation, if indeed there is one, may be moot.
Case in point: an older home near Cedar Lake in Minneapolis that hit the market one year ago. More than one realtor — myself included — thought that the house’s key stats (foundation size, finished square feet, etc.) came in on the “generous” side. Yet the home sold quickly — in less than one month — for what seemed to be top dollar given its size, condition, etc.
It turns out it didn’t matter. As of a few weeks ago, all that’s left of the home is the .3 acre lot it sat on.
The home’s ultimate fate as a tear-down also explains mystery #2: why it sat idle for almost a year. When you’re planning a $2.5M house — and you can bet there’s one coming, given both the location and what the Buyer paid for the house, er, land — $40k or $50k in interest isn’t a big deal (even if the Buyer paid cash, the opportunity cost on that money would have been mid-five figures). Logistically, it can also take that long to coordinate with the architect, builder, etc.
Sellers who may be encouraged by the foregoing to “take liberties” representing their home’s vital statistics or condition should think twice: a small fraction of the homes people consider to be tear-down candidates actually are (see my Aug. 12 post, “Tear-Down Economics”). For the vast majority of homes, especially in today’s market, a Sale is likely to involve a careful inspection by a budget-minded consumer.
P.S.: While most homes are not tear-down’s, plenty are candidates for serious remodeling. If that’s the case, it can be smarter to leave a major project such as a Kitchen for the next owner, rather than attempt a partial or superficial update.