So you’ve decided to list your house for sale. You no doubt understand that this comes with many different obligations on your part. Beyond all of the obvious stuff like measuring its square footage, taking pictures that cast it in its best light and make it look the most desirable, and hyping it up on the internet, there’s a little something involved that most people dread: explaining what’s wrong with it.
Your house has been lived in, and like all houses that have been lived in, it isn’t perfect and pristine. Most home buyers understand this, and if you were to present it as flawless, they’d likely have some well-founded suspicions.
Fortunately for everyone, the housing market doesn’t rely simply on what people say is and is not valuable. There are legal requirements for disclosing problems about your house that you know about, so that the seller isn’t taken by surprise by them once the sale has been made and they move in. Furthermore, there are ways in which an objective estimate of your home’s market value is made by an impartial third party.
So, let’s talk about what you, the home seller, have to do to disclose your home’s condition.
This is a document that outlines all of the problem areas of your home. Issues can range from minor and relatively superficial issues to major problems such as:
- Foundation issues
- Pest infestations
- Mold, rot, bacteria
- Flooding and water damage (in both the house and in the yard)
- Outdated or sub par insulation
- Damaged siding
- Asbestos, radon, and other harmful substances
- Soil contamination of any kind
- Electrical and plumbing issues
- Problems that are likely to occur in the future
You get the idea. You need to go through and find any areas that include problems listed above, as well as any other areas in which a home buyer would need to know about, and include them in a Seller’s Disclosure document.
Beyond that, the document also needs to include information related to the following:
- Flood plains
- Earthquake zones
As they relate to the home.
Generally speaking, you will want to have your Seller’s Disclosure completed before you advertise your home. Although there are some places in which this isn’t a necessity. The time at which you must disclose this information may be different according to your state.
The first thing to remember here is that this is not something you are going to have to pay for. A home appraiser is appointed by the agency who is lending to the buyer. The buyer is the one who will pay for the home appraisal.
The reason for this is that selling and buying a home requires objectivity, and that’s virtually impossible as a home seller. Let’s face it: you have an incentive to hype up your home’s value and downplay any problems that it might have. You want to sell your home, not go around telling everyone what’s wrong with it.
Furthermore, you probably don’t know exactly how to find all of the problems your home house. It likely has issues you didn’t even know existed! It takes a trained eye and a certain level of education to spot all of the issues involved in a house. Most people aren’t even sure how to find problems with their own vehicles, after all.
That’s why a home appraiser – an objective third party chosen to provide an impartial estimate of your home’s true market value – is appointed by the lender.
As the home appraiser goes through your house inside and out, he or she is likely to find issues you didn’t know existed. That’s perfectly normal. Remember, the home seller is an impartial party – they have no emotional or financial attachments to the actual market value of your home. Their job is simply to provide an objective analysis.
What to expect after the true condition of your house has been established
You have an incentive to sell your house, and that means there are certain repair costs that you may have to take care of. Otherwise, the potential home buyer may just turn down the offer.
After a home appraisal has been made, you will likely go through some simple repair negotiations. This is the potentially uncomfortable part. In cases like this, it’s important to keep a level head and to try and not let feelings overcome your reasoning. Try to put yourself in the buyer’s shoes: you wouldn’t want to purchase a house you knew you had to fix. That said, you shouldn’t be expected to have to take care of every little detail and make your house perfect. Resolving issues with the house’s insulation is one thing, having to repair some little crack in the tile or siding is another.
In these instances, it is usually in everyone’s best interest to simply default on credit. This way, the closing date won’t be unnecessarily postponed. As the seller, it’s also a good idea to put the repair costs in escrow. This way, the buyer can make the necessary repairs themselves and you can simply take the money and leave.
Selling a home can be a great event in your life, but it’s not without its difficulties. In all cases, remember to be level headed and not to take anything personally.