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Bed Bugs Souring Seattle Real Estate Sales?

By August 3, 2011


File this one under “cautionary tale” (and not epidemic levels that agents and buyers should start freaking out about). Many thanks to Tyler McKenzie for sharing his experience as the buyer’s agent in this bed bug-related condo sale.

A couple of weeks ago we noticed a tweet about condo deals in Seattle being soured by bed bugs. Of course we had to follow up (if only to be able to sleep better at night).

What we found was a single instance of bed bugs that factored into a recent condo sale on Capitol Hill. That’s not to say that bed bugs are not an issue in Seattle – they are here – but in writing this we are hoping to promote awareness as opposed to panic and overreaction. You do not need to start turning over mattresses at open houses :).

The bottom line in terms of real estate sales is that bed bugs are a short term maintenance issue (no matter how much they give us the heebie jeebies). Provided residents and HOA’s proactively and cooperatively treat the infestation then bed bugs are not likely to impact the long term value of the property or a condo sale. What follows is the story of an informed buyer, a proactive HOA, and ultimately a successful condo sale.

An Offer is Made
In the recent past, a buyer (from New York no less) made an offer on a Capitol Hill condo. Within the seller disclosure was a note that one unit in the building had found bed bugs and the entire building had been treated as a result. At the time of the offer, the building was considered bed bug-free and the transaction moved forward.

The home inspection passed without issue and all things seemed to be in order to close shortly thereafter. The close was scheduled for a Friday. (Note: A home inspection for the purpose of a real estate sale is primarily concerned with structural issues and does not screen for pests such as bed bugs.)

The Plot Thickens
On the Sunday prior to closing, the seller’s agent called with news that gave the buyer pause: The HOA had notified residents that there was another bed bug sighting.

“Here we were a few days before closing and I’ve got a buyer ready to bail,” said the buyer’s agent. “So I had to get educated about bed bugs.”

Typically, a buyer has a 3-day review period to withdraw their offer based on the seller disclosure that is submitted upon list. In this case, the second bed bug sighting surfaced after that 3-day period had lapsed. As a precaution the buyer’s agent requested a new disclosure statement be submitted (aka Form 17) which would allow the buyer time to review the new issue.

Call in the Dog
It never came to that though. The buyer was sufficiently satisfied by the actions of the HOA.

“Had the closing time-frame been longer, we probably would have pushed harder on that front.”

The HOA had immediately jumped on the bed bug sighting and scheduled a bed bug sniffing dog for an inspection of the entire building. Unfortunately, they couldn’t get the inspection before the closing date but after thinking it over the buyer was sufficiently confident that the HOA was on it. In addition, the seller held back the net proceeds until the inspection was complete.

In the end, the condo sale closed on schedule.

And the bed bugs? From what we hear, the dog found signs in two units which represented a small percentage of the building. The inspector’s recommendation was to treat the two units only.

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