Tell All - Disclosure for the Seller
Not sure whether you need to mention to potential buyers that your basement once flooded because your neighbor's swimming pool cracked? Or about the summer you had to call in the exterminators to get rid of the termites? Is the nearby presence of a gas station or dry cleaner important? What about the fact that every Saturday morning at 7 a.m. the fire station 2 blocks away holds 30 minutes of fire drills, including testing sirens?
The answer is: Disclose it all. In some states you are legally obligated to give such information to potential buyers. More than 30 states now have home seller disclosure laws explicitly describing what sellers need to disclose to buyers. But even if you're not required by state law to describe past structural problems or the Thursday-evening rehearsals of the garage band across the street, you should do it anyway.
Legally speaking, the trend is toward increased disclosure of potentially problematic situations relating to both the home and the neighborhood. In the worst case, if you don't disclose such information you may be sued.
When it comes to selling your home these days, the more information about its history and the neighborhood you give to potential buyers, the better. Since the 1980s and the rise of consumer protection laws, more and more states have passed strict laws spelling out just what you need to disclose. California, always a leader in consumer protection, passed its first seller disclosure law in 1987 and at least 32 states have followed. These laws vary widely from state to state and the only way to find out exactly what your state requires is to check. Every professional real estate agent or real estate lawyer will know how to do this and can help you comply with disclosure laws, which may include filling out a form from the state and handing it to potential buyers. With a little perseverance, you can also track down the regulations yourself and find out how to comply.
Inspection vs. Disclosure
By the way, having a home inspection is not the same as complying with disclosure laws. You may want to have a home inspection prior to putting your home on the market, but that is entirely up to you. Being able to show a potential buyer the written results of your inspection, assuming your house comes through with flying colors, is a marketing advantage. It's like handing a perfect report card to buyers.
Likewise if the inspector finds problems, but you have the paperwork to show you've repaired them, that's also attractive to buyers. It shows the buyers that you are honest and want them to buy your home in perfect condition. You should think of a pre-listing inspection as a marketing tool. And remember that the buyer may insist on sending in her own inspector before finalizing an offer. It never looks good if the buyer's inspector finds significant structural or mechanical problems that you haven't fixed and haven't even mentioned. In fact, that is exactly the sort of situation likely to sour a sale.
But disclosure is different. Disclosure doesn't mean you must repair problems. It simply means that you must disclose them to buyers so they understand exactly what shape the house is in.
It's a Local Thing
Furthermore, most disclosure laws require that you disclose information beyond basic facts about the state of repair of your home. Toxic mold, unused old fuel oil tanks buried in your yard, and termite damage must be disclosed in many states.
And because lead paint has become a concern in older homes - built before 1978 - federal law requires that sellers must disclose any information they know about the possibility of lead paint in the home. That means that if you've had tests done on the paint, you must disclose the results. If you know only that your house was built before 1978 and that it has not been painted since, you must also disclose that.
Disclosure sounds daunting, and it should be taken seriously. But don't think of it as an obstacle to selling your home. And don't think of it as a legal quagmire. Sellers who immediately offer potential buyers a written disclosure report generally get an excellent response from buyers, who like the idea that the seller isn't trying to hide anything. Couple the state-required disclosure report with a report from a certified home inspector, and you've just added to the desirability of your home. It helps if your home is in perfect shape. But even if it's not, buyers will appreciate your honesty.
- Check with your state to see if there are seller disclosure rules. If so, get a copy of the disclosure form. Most states now have them on a Web site for easy access and downloading.
- If you have a real estate agent or lawyer, have them help you with any questions you have about the form. If you're selling on your own and you really are baffled by the state's disclosure form, you can always pay an experienced real estate agent or lawyer for 30 minutes of their time to help you fill out the form. In general, however, the forms are not complicated and they're not intended to be tricky.
- Remember that honesty is the best policy. And being upfront about your home's state of repair - or disrepair - will also likely save you from misunderstandings with the buyer.
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