Disclosures are a key part of selling your home. The prospective buyer should have some reasonable assurance that the home they are getting is a valuable one, with no ticking time bombs lurking that will land them with a lot of expensive repairs.
Honesty Is the Best Policy!
Smart sellers will spruce up their home with a fresh coat of paint and perform any minor repairs before they put their home on the market. However, some unscrupulous people will make cosmetic changes to hide something more serious, such as stains or damage, in the hope of tricking a buyer and making a sale.
This is a short-sighted idea. The house will need to be appraised before a sale, and any decent real estate appraiser is going to know all the tricks. The sale will fall through, and your reputation as a seller will be dented with the realtor trying to work with you.
It’s best to disclose anything in need of fixing and work out with the buyer who will repair what, rather than trying to run a scam.
Real Estate Disclosures
A real estate disclosure statement is the buyer’s opportunity to learn as much as they can about the property, and it’s the seller’s chance to give a buyer an idea of what it will be like to live in the house.
Potential seller disclosures may include knowledge of dry rot or leaky windows, work done without a permit, information about a major construction project nearby that might affect the price of housing, and the quality of life in the area.
Disclosure documents inform buyers and also protect sellers from future legal action. It is a chance for the seller to reveal anything that can negatively affect the value, usefulness or enjoyment of the home.
Varying Disclosure Laws
Disclosure laws vary from state to state, and in some cases, city and county. Some regions are stricter than others. In general, disclosure laws require that sellers and their agents complete or sign off on a wide range of documents. These will include a Natural Hazards Disclosure Statement, Local and State Transfer Disclosure Statements, Advisories About Market Conditions and more.
These are usually boilerplate forms written by the local or state real estate association, and are most often a series of yes/no questions about the home the seller is putting on the market, and their experience of living there.
Sellers must also present any important documents between neighbors, previous owners, the seller or the agents in reference to any substantial defect or issue that might affect the value of the home.
Take the time and be sure to disclose previous improvements, renovations or upgrades; whether the work was done with or without permits, and by which vendors. Other standard disclosures include termites, any history of property line disputes, and defects or malfunctions with major systems or appliances.
Sellers may also need to reveal if they are involved in bankruptcy proceedings, if there any liens on the property, and so on.
Make Sure You’re Covered in Disclosure Agreements
It is vitally important to be honest about these disclosures, because depending on where the seller lives, they might be liable for what they disclose, or fail to disclose, for as many as ten years after the sale.
Trying to hide something can come back to haunt you long after the sale, and result in an expensive and complicated lawsuit. It’s not worth whatever savings a seller trying to hide something is keeping in the short run.