Real Estate Disclosure

A question I am often asked by my sellers is what should I disclose about my home to potential buyers?  My answer is always the same, disclose every material fact that you have knowledge of to a potential buyer.  Taking it one step further beyond the material facts, for instance, if there are rumors about something going on in the area then let the Golden Rule be your guide:  If it is something you would want to know as a buyer, then your buyer probably wants to know it as well--in essence, treat your buyers the way you want to be treated. 

Material Facts:

A material fact is something which might: influence a buyer's decision to purchase the property, negatively impact the buyer's decision, or alter the price and terms a buyer is willing to pay. All known material facts should be disclosed to a buyer. 

Use the following guidelines when filling out your Seller's Property Disclosure Statement:

• Disclose all that you see, smell, hear, sense, or know. 
  How about that barking dog next door?  This past week I had someone come into one of my Open Houses and asked about barking dogs.  I could honestly say that during the times I was there for Open House I never heard a single dog.  I told him I would verify this with the Seller, and suggested that he may also want to talk to the neighbors--remember, what is an irritant to one person may not be to another but to be safe, when in doubt, disclose. 
  
  
• Disclose any and all "work" that has been done to your home.  Personally, I would stay away from the word "repair" because it implies the defect has been permanently corrected.  Let's say you had a leaky faucet, I would disclose:
  • Faucet in Kitchen leaked in 2/2010
  • Paid ABC Plumbers, $85 to stop the leak
  • Faucet has not leaked since that time. 
    
    
• Disclose any and all items in your home that may need "attention", no matter how minor they may seem.
  For instance, if you have a ceiling fan that makes a noise when it is first turned on, indicate this in your disclosure statement:
  • The ceiling fan in dining room makes a slight noise when it is first turned on but works fine otherwise.
     
    
• Do not try to determine the cause of the defect unless you are 100% sure of its origin.  Let's say you have a water stain at the base of the hot water heater--if it was there when you bought the house, say so; if the stain occurred while you owned the house then state what happened:
  
  • Stain under the water heater was caused by the old unit
  • New water heater installed by ABC Plumbing 02/10, $375

How About Those Pesky Rumors?: Do onto others as you would have done to you.  Let the timeless Golden Rule be your guide when it comes to rumors, and remember there is a fine line between a "rumor" and the truth. 

• Case in point, I had a listing located across the street from 3 empty homes that the builder had bought back due to drainage/structural issues. Now, while everyone "knew" this was the case, the people who were affected were under a gag order not to divulge any facts about the buy-back AND the builder used a different company to purchase the impacted homes so when meeting with the remaining homeowners in the area, simply stated that they had no information about the situation. 
  
  I showed this listing to one of my buyers and disclosed the fact that there were empty houses on the South side of the street.   The potential buyers then talked to 2 other neighbors on the North side of the street who all confirmed that the houses on their side of the street had not been affected by the problems experienced on the South side.   My buyers made an offer on the home but the next morning, after a sleepless night, had a change of heart, citing the empty houses as their overriding concern. 
  
  My seller was initially quite upset with me for disclosing this situation.  But as I explained to them I had knowledge and therefore an obiligation to disclose to the buyers not only so they could make an informed decision but also to protect the sellers from the possibility of a future lawsuit.
  
  This story has a happy ending because less than a month later the buyers who came into my Open House and asked about the barking dogs, put an offer on the house (after being told about the empty houses across the street), that was accepted and will close shortly.  
  
  So, while there are many rumors swirling around about those empty houses, and no one has concrete information--the bottom line is that those houses are empty and therefore must be disclosed to a potential buyer.

The time you spend conscientiously filling out your Sellers Disclosure Statement could save you from a canceled escrow down the road or worse yet, a lawsuit.  Also, when it comes to completing the disclosure statement, by law, real estate agents cannot fill out any sellers' home disclosures unless the agent is the seller or a party to the transaction.

Are you thinking about selling your Green Valley, Arizona home?  Put the power of my proven marketing plan to work for you!  Call 520-241-7780 today for your free market analysis.