When buying or selling a house, a Seller’s Disclosure is going to be involved in some way. Many people don’t find out about this important document until it comes time to buy or sell a house, so they end up feeling unprepared. In this post, we’ll be discussing what a Seller’s Disclosure is and what it means for both the buyer and the seller of a house.
For the Home Seller
You’ve decided to list your house for sale. You no doubt know that this comes with certain obligations on your part. You have to measure the square footage, include the location (with all that that entails for its market value), and hype it up as much as possible for potential buyers.
Now comes the difficult and potentially embarrassing part: admitting its faults.
Yes, that’s what the Seller’s Disclosure is essentially about – explaining to the buyer all of the damage and problem areas in your home. However, keep in mind, the buyer knows your house has been lived in, and shouldn’t reasonably expect a brand new, pristine house. If you presented your home as perfect, they’d probably have some suspicions.
The best thing you can do is be upfront about these issues, especially the major ones. These include:
- Problems with the foundation
- Flooding and water damage (either in the house or in the yard)
- Electrical and plumbing issues
- Problems that are likely to occur in the future
- Sub par or outdated insulation
- Soil contamination
- Problems with radon, mold, paint, or asbestos
- Pest infestations
Things along those lines. It’s also common that certain “minor” issues are included like windows that stick or stairs that squeak.
Another thing to include in your Seller’s Disclosure document is information about:
- Earthquake zones
- Flood plains
And other things along those lines as they relate to your home.
It is usually a good idea to put together a Seller’s Disclosure before you advertise your home. However, the time in which you present it to the buyer may depend on certain factors such as the requirements in your state.
For the Home Buyer
It’s obviously important to get a good idea of the condition and true market value of the home you plan on buying. A Seller’s Disclosure is one way of knowing this, however it isn’t only means for doing so. After reviewing the Seller’s Disclosure, your mortgage lender will appoint a home appraiser for a more objective analysis.
After all, home seller’s have an incentive to downplay the problems in their home in an attempt to sell it more quickly. They also don’t want to have to pay too much in repair costs in order to do so. Furthermore, most people simply aren’t knowledgeable enough on how houses work to find all of the damage that has occured, is occuring, or is likely to occur in the future. Most people don’t even know how to find issues with their own vehicles, much less their own homes.