Full Disclosure: Understanding how Fraud Hurts Luxury Buyers
August 11, 2021
Luxury buyers have the most to lose when they encounter real estate fraud. And it goes far beyond the simple fact that they paid a higher purchase price. Every pain point for a victim of real estate fraud is worse.
Luxury buyers often have more costly renovation plans. It’s far more common for someone purchasing a multi-million-dollar property to budget well into the six-figure range to upgrade or improve a house before they move in. They often spend much of this money before they learn that the property has undisclosed latent defects. By the time they find out, they’ve already spent an incredible amount of money in reliance on a false representation.
In addition, actual cost of repair goes up too. Luxury properties tend to be larger and more expensive to repair. They have high quality fixtures in them. Replacing these also increases repair cost. A non-disclosure that could have been much simpler to fix in a cheaper property can be quite costly in a luxury home.
In addition, luxury properties are more sensitive to diminution in value resulting from undisclosed defects. Buyers in those markets are more discerning. And the elevated purchase price means that twenty, ten, or even five percent diminutions in value can add up to substantial sums.
Even worse than the direct financial hit, the time hit especially effects luxury buyers. Because luxury buyers tend to be higher income individuals, every hour they lose costs them more. Luxury buyers are losing substantial wages or business opportunities because they’re burning time dealing with the problem.
These factors make prevention especially important. Some of the basic steps people can take include insisting on a thoroughly completed SPDS. One too common occurrence is that sellers leave certain portions blank when they should disclose problems. In addition, buyers should ask plenty of questions, and use their agent to put those questions in writing. And of course, thorough inspections are important.
Finally, when a buyer finds undisclosed defects, it is important to investigate promptly. Luxury buyers have some of highest stakes in pursuing a prompt mediation, and the most to recover by protecting their rights.
Samuel Doncaster is a trial lawyer who’s very active in real estate fraud cases. He routinely helps people get their money back when they’ve been cheated in real estate deals. If you have a client who needs help with a disclosure issue, you can help them set an appointment by calling 480-666-4054 for a strategy session. That strategy session comes with a risk-free, 100% money-back guarantee.