Sellers Disclosure: What Do I Need To Know When Selling My Home?
When you’re selling a home, the words “sellers disclosure” may fill you with confusion, even with fear. What exactly is the point of a sellers’ disclosure and how much do you need to reveal? The following FAQs will give you the answers you're looking for.
Q. What is a sellers disclosure?
A. It’s a document to be completed by the owner of a residential property for sale. In general, the sellers disclosure form consists mainly of several pages of yes/no questions describing the house or condo, including anything that “could have an adverse impact on value” or on a house hunter’s decision to purchase. Common examples of these negatives are water damage, hazards (lead paint, cracked foundation, etc.), or pest infestation.
The disclosure may also provide general information such as the age and condition of fixtures and appliances, the number of an assigned parking spot (where there is a shared lot), or whether the home is classed as a heritage building.
Answer the questions to the best of your knowledge. "Unknown" or "not applicable" are usually listed as possible responses.
Q. Am I as a seller legally required to submit a disclosure?
A. That depends on where you live. Certain states (California, to name one) have very stringent requirements. In others, the disclosure is optional. And in some areas, the sellers disclosure actually becomes part of the property purchase contract.
Speak to your broker or a local real estate lawyer to find out how to proceed. While these professionals are not permitted to fill out the sellers disclosure for you, they can certainly answer any questions you might have.
Q. Which home improvements need to be included in the disclosure statement?
A. All major home improvements like a kitchen remodel, bathroom addition, or roof replacement must be mentioned. The seller has to provide details of the work that was done and disclose whether necessary permits were obtained. Minor home improvements and repairs (for example, a paint job or new faucet) do not need to be included.
Q. Does a sellers disclosure take the place of a home inspection?
A. No, your prospective buyer will most likely still opt to have the home inspected by a professional as a condition of the sale. You as the seller might want to hire a home inspector yourself prior to officially listing your property, to give you a "heads up" on issues you weren't aware of.
Q. What if I know there’s a problem?
A. If you, as a hopeful home seller, know that a problem exists with the house (a leaky roof is the classic example), you have two possible courses of action:
- You might choose simply to leave the issue as is. In that case, disclose the defect and be prepared to make a concession on the price.
- You can hire a qualified roofer to fix the problem. This second approach is preferable for several reasons: your house will show better – and probably sell faster -- when it’s in top shape, and you won’t have to compromise on your expected price. Be sure to document the repair in your sellers disclosure and supply a copy of both the warranty and the permit, if applicable.
Q. What happens if I fail to disclose a known issue?
A. Once again, the answer depends on your state law. Generally, if the buyers discover the omission before closing, they are allowed to walk away from the deal. In many areas, if they have gone through with the purchase before finding out something’s wrong, they can sue you (ouch!), within a specified time period.
Q. Can't I just market my home “as is”?
A. Yes, this is permissible in some locales. It may be an appealing route to take when you are selling an inherited property or you simply want to get your hands on some cash as quickly as possible. In such a case, you won’t have to prepare a detailed sellers disclosure. However, normally you will still be required to disclose any latent defects – threats to the health and safety of your home’s occupants which are not readily visible (radon, for instance) – as well as any legal issues with the title.
Laura Firszt writes for networx.com.
Looking for a Pro? Call us(866) 441-6648