The Basics on Disclosures

As a seller, you are legally bound to disclose any and all defects in your home prior to the sale. Unlike years ago, the seller is now held accountable. Buyers can sue for damages and conceivably force the seller to reclaim the house.

Though this is highly unlikely, it has been known to happen. To try and minimize the possibility of such lawsuits from taking place, many states now have mandatory disclosure laws. Sellers must make sure that the buyer is aware of any defects on the property, from water damage to structural problems and everything in between. Do not be afraid that these disclosures will scare away buyers. An interested buyer will accept some defects – after all, perfection is hard to find! In some cases, the buyer will use your disclosure to further negotiate the price. Moreover, the buyer will appreciate your honesty up-front rather than discovering problems after moving in. As a seller, you are also held accountable for unknown defects that may cause the buyer problems in the future. Now, you may be asking yourself, “How do I know if I found all the defects in my home?” You must protect yourself by investigating any potential problems and taking the steps necessary to try and fix them. This can be accomplished simply by hiring a competent inspector to check the house thoroughly before the sale. Even an inspector may not find absolutely everything; however, this shows how much effort you put into your disclosure statement.

As mentioned before, your disclosure statement can serve as a negotiating tool. For example, if the buyer wants you to fix the faulty wiring that will cost you upwards of $2,000, you can offer to lower the price by $1,000. They can put the money towards fixing the wiring and you save the money and time involved in fixing the problem yourself – everyone is satisfied.

While walking prospective buyers through your home, you should disclose any problems that you are aware of. Furthermore, when this is finished, it is imperative that you and the buyer take the time to write out and SIGN a disclosure statement. Without this, you have no protection from a buyer who claims they were never made aware of defects that you know were previously disclosed. If no official disclosure statement exists in your state, have your attorney write one up. You should give the disclosure statement to the buyer as soon as the deal is made.