15 minutes after a new deal landed on my desk in late 2010, I sensed trouble. Warning lights were figuratively flashing in my brain and my cautious cranium was literally screaming, “Danger! Danger!”
I knew the house was overpriced, since I had previously represented the seller of the house down the block. I compared the municipal certificate accompanying the contract with satellite photos, and found no mention of the detached garage, gazebo, and screened-in porch I spotted.
I e-mailed my new client these bullet points:
- The offered price for #50 seems excessive, as #68 sold in the past month for $175,000 less.
- When I checked street and overhead satellite photos to ensure #68 was similar to #50, I saw a lot of added structures that didn’t seem to be on the town’s records.
- While those improvements might add to the value, $175K difference was a big stretch!
- Legalizing the added items might jeopardize an interest rate lock, delay closing, result in some/all of the features being altered/removed, and perhaps raise the assessed value of the premises (hello, tax increase).
My client swiftly replied, “Thanks for your thoughts, but I like this house and want to buy it. Will you still represent me?”
I advised that I would be happy to be her lawyer, but that all the red flags required me to present a cover my ass/hit you over the head letter for her to sign.
I did, she did, the house didn’t appraise, and after a lot of nasty wrangling and pocket emptying on both sides, the transaction closed in early 2011. I just got an e-mail from my former client saying, “I wish I had listened to you! I wanted to grieve my taxes. I was told that even though my taxes rose over $800 for the added garage and heated porch (as well being based on the high price I paid), the company wouldn’t take on my grievance because I was not being taxed too much.”
I always feel guilty coming across as a wet blanket to an excited buyer. This client’s note will ease my remorse next time I try to put the kibosh on a deal.