Whether you’re buying or selling a house, there are certain issues about the house in question that are going to need to be established. In this post, we’ll be talking about what is involved in a seller’s disclosure and a home appraisal.
This is a document that the seller is obligated to provide the buyer. The reason for this document is to establish certain issues or problems with the house. These can include:
- Foundational damage
- Fooding and water damage
- Problems that can occur or are likely to occur in the near or far future
- Siding damage
- Roof damage
- Problems with the insulation
- Sub par or outdated materials
- Dangerous materials
A seller’s disclosure is essentially an admission of any problems that are involved with the house. After all, nothing is perfect, and that includes houses that have been lived in. The buyer probably understands that there are going to be issues, and in fact would be suspicious if a seller presented a house as flawless.
It is not a wise idea for a home buyer to merely trust the word of the home seller. The reason for this is two-fold.
One, the seller has an incentive to buy a house and will naturally, on purpose or not, offer a more ideal version of the house that probably doesn’t quite match up to reality. Two, the home seller probably doesn’t have the knowledge, ability, or means to determine the exact state of the house, or find all problems that are involved with the house. After all, most people don’t even fully understand how their vehicles work, much less the intricacies of their own homes. Can you really trust the layman to determine the nature and scope of possible foundation damage? What about trusting their judgement as to problems that are likely to occur in the future?
These are the various reasons for a professional home appraisal, which is conducted by a home appraiser.
The way this situation works is that the lender (the agency lending money to the buyer) hires and appoints a home appraiser. This is because this process requires an objective third-party. If the buyer or seller hired a home appraiser of their choice, this would present a conflict of interest.
That said, it is usually the buyer who pays the costs for the home appraisal, not the lender.
The home appraiser inspects the home, often with a team of people, and they determine the true market value of the home. Figuring out a house’s true market value relies on both establishing its condition and comparing it to local homes.
Following a professional home appraisal, cost of repair negotiations will take place. If the seller wants to sell the home, they have to accept that certain repairs have to be made. That said, the buyer shouldn’t be overly concerned with small issues like cracks in the siding, rather they should focus on the big stuff – foundation damage, mold, rot, and similar problems.
Once the repair costs are settled, a sale date can be set.