Monday, May 03, 2021
Dallas Residential Real Estate Trends that Don’t Favor Buyers
The Dallas-Fort Worth housing market is at a record high. On April 27, 2021, the S&P CoreLogic Case-Shiller Dallas Home Price Index revealed that home prices were up over 9 percent compared to April 2020, with a 1.68 percent increase compared to March 2021.
Residential Buyers and Risk of Exposure
The increase in home prices is likely due to record low interest rates, relocation from other areas, stimulus payments to help with down payments, combined with low inventory of new and preowned homes in Dallas. While it may be a seller’s market with high sale prices, residential buyers are left exposed as they compete among themselves.
These days, cash offers are king. But what if multiple buyers provide all-cash offers? This is where some buyers are leaving themselves exposed by offering to waive an appraisal, waive inspections, agree to quick closings, and (albeit, inadvertently) waive their protection under the Fair Housing Act.
While waiving an appraisal may not be of concern when a buyer pays in all-cash, waiving inspection is not advisable in most scenarios. The Texas Real Estate Commission requires sellers of previously occupied single-family residences to disclose information regarding the material facts and physical condition of the property. Common conditions that must be disclosed include mold, water intrusion, cracks, and other general wear and tear items. But just because someone doesn’t see or disclose a defective condition does not mean the condition isn’t there. While Texas property law affords some protections for sellers, there are some instances where sellers can later be accused of material misrepresentation and fraud related to nondisclosure of a property defect. Inspections provide protections for both sellers and buyers and allow for all lay parties to the transaction to understand the condition of the property from an unbiased source.
Precautions Around a Bidding War
In a bidding war, buyers will often write letters to the seller. Letters to sellers usually include background information about a buyer with reasons why a seller should accept that particular offer. These letters often include family photos or other personal information unique to the buyer. For example, a buyer could disclose that he or she is a single parent, a first-generation American, or is looking forward to using features of the home that accommodate a disability. While seemingly persuasive, these stories can reveal that a particular buyer is within a protected class of the Fair Housing Act. Buyers and sellers alike must be cognizant of the Federal Fair Housing Act and the Texas Fair Housing Act. These acts protect a buyer’s right to buy a home free from discrimination on race, color, national origin, religion, sex, familial status, and disability. Buyers and sellers should also be aware of the pitfalls that these letters can bring, and real estate professionals should take measures to protect themselves from liability accordingly. One measure buyers can take is to simply not send a letter. Another is to have a legal professional review the letter in advance of the homebuying process to make sure the buyer’s rights are protected. Sellers should avoid reviewing buyer letters to mitigate the risk on their end.
During a bidding war, buyers and sellers may be striving for the best price, lowest interest rate, or nicest home on the block. However, there are dangers to transactions if not conducted methodically and intentionally.
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