Episode 34: Important Things in Real Estate - NHD's
NHD's are the second most important thing in Real Estate transactions. This Thursday we're talking with the knowledgeable Jason Hellawell, Executive Sales Associate of Property ID. If you're about to buy or sell a home, get ready to learn about those Natural Hazard Disclosure Statements.
The Question: What is an NHD?
There are so many sides to the world of Real Estate it's hard to cover them all. We were excited to speak with a well knowledge man, hailing from the world sectors of NHD, Jason Hellawell.
Why are NHD's important?
They are hailed as the second-ish most essential part of the Real Estate Transaction for both buyers and sellers. It is a state-mandated report, so it California, a must-do.
"Out of all the documents that you go through that about 70-80 documents between your disclosures, your purchase, contract, all the stuff that you have to get into escrow. There are two things actually legally required."
Transfer Disclosure Statement
Natural Hazard Disclosure Statement
What does this NHD Statement do?
"It's since about 1978. The natural hazard disclosure was added to the real estate purchase contract to help buyers and sellers and keep everybody out of litigation and to disclose. [...] There's huge importance. The natural hazard disclosure report is anything that can affect the water, the soil, the air, all the local disclosures that are in an area."
What is the NHD Industry like?
There are only about 50 different companies in the NHD Industry in the U.S.
Obtained from the Propertyid.com website resources of sample reports.
They are not regulated
There is no licensing
Yet! It is required by law to have an NHD Statement completed when you buy or sell your home.
If you're looking for a great NHD Team, look to Property ID in Los Angeles for all your needs.
How long does it take to complete an NHD?
According to Jason, their team's reports take about 2-4 hours to complete and it is insured.
How much does an NHD cost?
Generally, a Seller will pay for this report. For Property ID this report will run you $99.00.
But it's worth it because there are companies following up, conducting something called "Ambulance Chasing".
What is "ambulance chasing"?
"It's a law firm that's calling buyers who just closed escrow on a property. They're asking them, how did your transaction go? Can I see a copy of your transfer disclosure statement? I want to make sure that everything was disclosed on your property. And they're finding when a seller completes the transfer disclosure statement they just put no-no-no-no."
Checking off "no" to everything isn't a good sign. That means the property was perfect. And we all know that no property is perfect. And that's a lawsuit waiting to happen.
So a good Real Estate Agent will assume the responsibility of making sure a property NHD is completed.
Why is having a good agent important?
Because buying or selling a home is full of contracts and requirements to navigate.
Lori said, "Your agent is who leads this transaction. And sellers and buyers rely on their agent to give them the right information."
What is included in a Natural Hazard Disclosure?
Anything that's a local disclosure.
Yup. That simple. Anything that a city has disclosed.
What would need to be disclosed?
Special flood zone areas
Area of potential flooding on a dam failure inundation map
Very high fire severity zone
Wildland area with substantial forest fire risks
Earthquake fault zone
Seismic hazard zone
"Anything that could affect the value in demand and desirability of a property could affect the value of the property."
It could also prevent you from digging, building, or modifying things if there is a hazard or endangered wildlife.
What is Assembly Bill 38?
A new bill, Assembly Bill 38 for fire safety may require a buyer or seller to clean up around the property or to disclose that information.
"If you've closed on or after January 1 2021 and if the house was built before January 1, 2010, you must disclose the features of the property that make the home vulnerable to wildfire and flying embers."
How does the NHD affect my Home Insurance?
So when you fill out the form, you check "yes" or "no" in those little boxes. Your answers have a direct impact on your insurance.
Depending on your zone and risk, your insurance will increase and decrease. If you checked yes on being in a high fire zone or a flood zone, etc. your insurance will increase due to risk.
Tip: Look into your NHD results ASAP and call your insurance company for a quote right away, and you may even know what to expect before you open escrow.
Sometimes your report opens up benefits too. If a city is normally classified as a high-risk zone, and your home happens to not be considered high risk, your insurance fees may decrease.
How do you know you're working with a good NHD Company?
Jason Hellawell advises that you:
Look at the report's Limits of Liability in the back of the report.
Is it updated information?
Do they verify information?
Do they take responsibility for the information?
Email your report to Jason at JHellawell@propertyid.com so he can review it and explain it to you.
Some NHD companies generate a report in 5 minutes. simply because it's a "required" document, push the liability and responsibility onto the agent or the buyer. And because this industry is not regulated, they can do that.
That is why your NHD report with Property ID is $99.00. They are paying for access to all of the local property disclosures and proper information.
When an NHD company assumes responsibility, it puts the Agent and the Buyer at ease during the transaction because they can trust the company to verify local disclosures themselves.
What are some examples of disclosures?
Busted underground gas lines
Blackwater issues (Carson, CA)
Horn Advisory sounds (San Francisco, CA)
Bad Smells
Airplanes overhead
Metro or train passing
How does this affect my taxes?
Any special assessments on the property taxes will be revealed in the NHD report and break it down for you. If there are special assessments that are not "paid off" or completed, you will have to take responsibility for those payments and be aware of how much extra your taxes are going to be.
Can I see a report example?
Sure! Here’s an example report from Property ID NHD.
Choose the right report.
Get the most qualified report
Get the most thorough report
Get a protected report
Get an updated report
If for any reason you are sued due to a poor report, when you work with Property ID they will take care of you.
Attorneys are on staff
Work directly with the EPA (Environmental Protection Agency)
Work directly with government agencies
Ensure details and disclosures are in the report
They stand behind their word in the Limits of Liability pages. In almost 50 years, the team has not lost a lawsuit.
Tip: Request a new and updated certified map from the source. You can check to see if it's an outdated generated one by looking at the bottom of the map, "For public record but not for disclosure purposes."
Where can you find Jason Hellawell?
When he's not hanging out at his place by the beach or getaway in the mountains you can contact him at:
626-660-5881
If you have any questions about buying or selling properties and their disclosures, give him a call. He'd love to chat about it with you or refer you to a geographer, geologist, or attorney.
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Lori Alvarez has been in the Real Estate Industry for almost 15 years. If you’d like to contact her call her at 909-227-4196. She loves helping families find their home sweet home.
909.227.4196 | KW Realty, DRE 01794115
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