Seller disclosure is critical to a smooth home sale and reducing seller liability, but not all homeowners are aware of its value to the home selling process. Seller disclosure, the obligation of a home seller to tell any potential buyer about problems in the property, is only mandatory in several states. However, it is rapidly catching on locally and many real estate companies are developing their own voluntary disclosure policies.
The reason is simple: seller disclosure reduces liability. If a home buyer knows about a problem up front, then they can’t later claim you hid it from them. A buyer can file a consumer fraud suit that can cost you three times as much as taking care of the problem in the first place. So avoiding disclosure is like crossing the street with your eyes closed–eventually you will get hit.
Seller disclosure not only includes a duty to disclose problems you know about, but it also includes responsibility to disclose problems you should have known about. “The days of caveat emptor (buyer beware) are over; now it’s almost seller beware,” said attorney Gordon Gemma. “It’s better that they know about a problem now and resolve the issue than find out later through a lawsuit.”
Most home buying tips include a recommendation to get a home inspection. That’s why sellers are smart to have a professional home inspection done when their house is listed. Home Inspectors can identify problems, provide solutions and offer suggested improvements that can actually help you sell your home more quickly. If there is a problem, it’s always better to find out now rather than later when a buyer is involved. This way you can elect to either fix the problem or disclose it. If you choose to make repairs, you can bet it will always be less expensive to do them before a buyer is involved. Buyers will usually want the top-of-the-line repair when an average-quality job is good enough.
Also, most home buyers will eventually get an inspection before finalizing a sale, so having one done ahead of time will give a seller some idea of what to expect. There’s nothing worse than bargaining down the price of your house to your bottom dollar, only to find out that the furnace is shot and the buyer wants a new one.
Plus, when the buyer’s home inspector shows up, it’s always a good idea to politely hand over a copy of your home inspection to the buyer’s inspector. You should not suggest that the buyer’s inspection will be any less valuable as a result that you had your own done, but having taken that step will demonstrate to both the buyer and their inspector that you understand the process and took steps to make sure you avoided any potential problems mid-transaction.
As the old football phrase goes, the best defense is a good offense. Identifying and disclosing the condition of your house via seller disclosure will not only help sell it faster and avoid costly seller mistakes, it will allow you to move on to your new home with far fewer worries. For more home buying tips as well as ideas for sellers, visit HUD’s website.
We bought a home that was corporate/bank owned. There was no disclosure due to the fact that they claimed they knew nothing about the property to disclose. However now 3 years later, and 3 years of our basement flooding, mold taking over our house, and many other problems. We have now, discovered proof that they bank that sold us this house, was not only aware of the issue, but also hired someone to come in and clean up the mess, paint to cover the water stains, mold, ect… and we also beleive they would have had to have come to the house on a regular basis to keep the water cleaned up. We have had to do it regularly since we lived here and so did the people that lived here right before us, so it seems impossible that the basement just stopped while no one lived here. We are currently seeking the aide of an attorney to sue the bank that sold us the home. Had we known what they did, we would not have bought this house. Any comments, advice, or knowledge in this type of situation would be greatly appreciated!