Whether you’re about to purchase a new condo or sell your current home, there is a lot to learn and paperwork to sign. One of these critical documents is called a seller’s disclosure. A seller’s disclosure, also known as a property disclosure, is a document that sellers legally must provide buyers. This paperwork will include all the undisclosed details related to the property that negatively affect its value. So before you finalize the buying or selling a home, read on to find out why a seller’s disclosure is an essential part of any real estate transaction.
Why is a seller’s disclosure necessary?
A seller’s disclosure is a legal document protecting both the seller and the buyer. It covers the buyer by informing them of any issues or defects the home and surrounding property may have. It also safeguards the seller from being sued by the buyer after the transaction if the seller’s disclosure was completed correctly.
For Buyers
The goal of the seller’s disclosure is to inform the buyer of the property’s history and future repairs so buyers can make an informed decision. For example, suppose the seller’s disclosure reveals a major issue with the home. In that case, buyers can back out of the deal without losing earnest money. Problems documented in the seller’s disclosure can also give the buyer negotiating power, such as the price of the home or requesting the seller make any necessary repairs.
For sellers
The seller’s disclosure can only protect the seller if done accurately and honestly. If done correctly, this document will protect the seller from being held legally liable for any issues that may develop with the home. This would only be the case if the seller made the buyer fully aware of all home defects before the purchase. Then, the seller only needs to disclose what the state requires.
When should a seller provide the disclosure?
Typically, sellers may choose to disclose as early as home tours. However, the listing agent must be transparent with buyers about any known issues with the property, so some will do this upfront to make the process quicker.
How a seller’s disclosure can impact a home sale
The seller’s disclosure can significantly impact the home selling process if a property has substantial issues. Buyers must decide if they’re comfortable with any significant issues disclosed and get a professional inspection to assess what it takes to handle the problem. As a buyer, it’s essential to carefully review the seller’s disclosure packets with a real estate agent and during the home inspection.
What are the standard real estate disclosures?
To help you get an idea of what to expect, here’s a list of standard disclosures:
Hazards: High risk of natural disasters or threats like contamination, lead paint, radon, asbestos, and toxic mold.
Repairs: Any significant repairs the house may need and has had. Significant repairs would include structural, electrical, and plumbing issues.
Water damage: Flood risk or existing flood damage.
Missing items: The seller needs to list any items removed after the sale, such as refrigerators or lighting fixtures.
Other possible disclosures could include special historical districts, homeowners associations, and unpermitted improvements.
Some federally mandated disclosures include lead paint, asbestos, wetlands, and floodplain disclosures. Of course, you can always ask the seller if you want to know something about the property. Take time to understand what disclosures aren’t required to be disclosed in your state. That way, you’ll know what to ask when the time comes.
What happens if the sellers fail to disclose issues adequately?
If the seller fails to disclose or actively conceals problems they’re aware of that effect the property’s value, the buyer can sue. The seller can be subject to lawsuits for recovery of damages based on fraud, deceit, misrepresentation, and breach of contract. So if the law doesn’t require you to disclose something, it’s best practice to determine if it may impact the buyer.
Even with a seller’s disclosure, don’t skip a home inspection.
In addition to the seller’s disclosures, the buyer should always have an inspection done. No matter how thorough or trustworthy the seller may be, a seller’s disclosure is no substitute for a thorough home inspection by a licensed and qualified professional. Most buyers aren’t trained to look for and identify the issues that can affect the average home. So before you buy, it’s in your best interest to get an inspection.
Final takeaways about seller disclosures
The seller’s disclosure is necessary for both sellers and buyers.
There are several disclosures, but not all will be mandatory in your state. Work with a real estate professional to understand your situation better.
In addition to a seller’s disclosure, it’s recommended to have a professional inspection of the property still.
Why is a seller’s disclosure necessary? A seller’s disclosure is a legal document protecting both the seller and the buyer. It covers the buyer by informing them of any issues or defects the home and surrounding property may have. It also safeguards the seller from being sued by the buyer after the transaction if the seller’s disclosure was completed correctly.
For Buyers The goal of the seller’s disclosure is to inform the buyer of the property’s history and future repairs so buyers can make an informed decision. For example, suppose the seller’s disclosure reveals a major issue with the home. In that case, buyers can back out of the deal without losing earnest money. Problems documented in the seller’s disclosure can also give the buyer negotiating power, such as the price of the home or requesting the seller make any necessary repairs.
For sellers The seller’s disclosure can only protect the seller if done accurately and honestly. If done correctly, this document will protect the seller from being held legally liable for any issues that may develop with the home. This would only be the case if the seller made the buyer fully aware of all home defects before the purchase. Then, the seller only needs to disclose what the state requires.
When should a seller provide the disclosure? Typically, sellers may choose to disclose as early as home tours. However, the listing agent must be transparent with buyers about any known issues with the property, so some will do this upfront to make the process quicker.
How a seller’s disclosure can impact a home sale The seller’s disclosure can significantly impact the home selling process if a property has substantial issues. Buyers must decide if they’re comfortable with any significant issues disclosed and get a professional inspection to assess what it takes to handle the problem. As a buyer, it’s essential to carefully review the seller’s disclosure packets with a real estate agent and during the home inspection.
What are the standard real estate disclosures? To help you get an idea of what to expect, here’s a list of standard disclosures:
Hazards: High risk of natural disasters or threats like contamination, lead paint, radon, asbestos, and toxic mold.
Repairs: Any significant repairs the house may need and has had. Significant repairs would include structural, electrical, and plumbing issues.
Water damage: Flood risk or existing flood damage.
Missing items: The seller needs to list any items removed after the sale, such as refrigerators or lighting fixtures.
Other possible disclosures could include special historical districts, homeowners associations, and unpermitted improvements.
Some federally mandated disclosures include lead paint, asbestos, wetlands, and floodplain disclosures. Of course, you can always ask the seller if you want to know something about the property. Take time to understand what disclosures aren’t required to be disclosed in your state. That way, you’ll know what to ask when the time comes.
What happens if the sellers fail to disclose issues adequately? If the seller fails to disclose or actively conceals problems they’re aware of that effect the property’s value, the buyer can sue. The seller can be subject to lawsuits for recovery of damages based on fraud, deceit, misrepresentation, and breach of contract. So if the law doesn’t require you to disclose something, it’s best practice to determine if it may impact the buyer.
Even with a seller’s disclosure, don’t skip a home inspection. In addition to the seller’s disclosures, the buyer should always have an inspection done. No matter how thorough or trustworthy the seller may be, a seller’s disclosure is no substitute for a thorough home inspection by a licensed and qualified professional. Most buyers aren’t trained to look for and identify the issues that can affect the average home. So before you buy, it’s in your best interest to get an inspection.
Final takeaways about seller disclosures
The seller’s disclosure is necessary for both sellers and buyers.
There are several disclosures, but not all will be mandatory in your state. Work with a real estate professional to understand your situation better.
In addition to a seller’s disclosure, it’s recommended to have a professional inspection of the property still.
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