What Are "Known Defects?"

By
Real Estate Agent with RE/MAX Compass, formerly RE/MAX WHP 0524642
https://activerain.com/droplet/4Ddg

As you look for homes on our MLS you will notice a field towards the bottom of the page that looks like this...

 

known defects

I have shown thousands of houses to buyers over the last 11 years, and I can firmly state that every single one of them had at least one defect the seller had to of known about. But, what exactly is a "defect?" Is it as simple as a torn window screen, or does it have to be something more expensive like a cracked slab or broken air-conditioner? Who decides what's defective enough to be disclosed on the MLS? Is it the agent, the seller; or perhaps both? 

If I show a home with a broken dead bolt wouldn't that constitute as a defect? A reasonable person would know that the seller is aware of this issue as it is the front door lock that is broken. 

But almost all listings on our MLS state what you see here: No Known Defects. In my opinion, most agents believe that only "major ticket items" (whatever they see as a major ticket item) is considered as a known defect. 

Personally, I think it's imperative that you upload your sellers disclosure to the mls if you are going to state "no known defects." At least you've demonstrated your willingness to disclose as much as you can possibly know about the house. There's also a selection that reads: Known Defects Repaired. 

 

Defect: a shortcoming, imperfection, or lack.

 

 

Posted by

 

 
Greg Nino
, Houston area Realtor®.
Helping residential buyers, sellers and tenants 7 days a week.
Available @ 832-298-8555 

RE/MAX Compass (Formerly RE/MAX WHP)

www.GiveMeMyHomesValue.com

www.EverydayHoustonHomes.Com

 

 

The information contained in this blog is believed to be reliable and while every effort is made to assure that the information is as accurate as possible, the author of this blog, and its comments disclaim any implied warranty or representation about it's accuracy, completeness or appropriateness for any particular purpose. All information is copywritten and the property of Greg Nino.  

 

 

 

 

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Re-Blogged 1 time:

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  1. Ginger Harper 05/21/2015 10:05 AM
Topic:
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Groups:
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Rainer
257,123
Kathleen Frawley
Keller Williams 916 730-4404 Elk Grove, Wilton, Folsom, Sacramento - Wilton, CA
South County Sacramento, 916 730 4404

so NO shortcomings, imperfections or lack....bwa ha ha right.  Can you just say see disclosures? or maybe "tons of crap...come see for yourself." 

If you find out it is on a nuclear waste sight, can you then get in trouble for your initial "no known deficits" (never mind glow in the dark roof)

May 18, 2015 01:37 PM #46
Rainmaker
519,075
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

I like this interesting question about what is a known defect ... and also what information about a defect should be published at the MLS.

CA real estate disclosure law is that sellers and their agents must provide all information to buyers about the property that would materially impact the decision of the buyers to buy the home and property.

However, CA law does not require such disclosures at the MLS publication.

May 18, 2015 04:35 PM #47
Rainer
21,683
Charlotte Gibbs Johnson
American Realty Pros of GA - Covington, GA
CRS - 34 YR Realtor Professional

In GA MLS there is not a field for "known" defects....though I highly doubt most agents in this area would put anything in there to begin with(they dont even fill in most of the required fields correctly LOL) however I do understand what you are saying. I just went through a situation where the appraiser informed me that the previous appraisal on the house( on a contract that fell thru), which by chance he had completed for another mortgage company) had already written up the roof and it did not appraise for the listed price was known to the listing agent. This was never disclosed in the Seller Disclosure and the disclosure stated there were not any issues with the roof during the Seller's ownership. When the roofing contractor went out to the house to inspect he showed pictures of recent caulking that was done on the roof where it was leaking. In order for the loan for my client to proceed the roof had to be replaced. This happens time and time again where the listing agent is made aware of defects during a home inspection or appraisal and it is never disclosed.  Especially with REO homes when the contracts dont go thru from defects discovered during a home inpection and they never tell future agents about the issues....just rely on the fact that the house is sold "as is" from the bank.  Am I not correct to expect that as agents and REALTORS we are obligated to disclose these facts whether the bank does or not .....Frustrating that we do not take our job and ethics more serious....Even when I listed bank properties I made sure to take pictures of what was wrong with the house so that the agents could truly see before they wasted their time with a client that was FHA or VA....

May 18, 2015 09:27 PM #48
Rainmaker
152,992
Nancy Hankin
RE/MAX Real Estate Consultants - Palm Springs, CA

We do not have this comment in our California MLS. Personally, I don't understand WHY this is would be in a MLS Field. In our area, DEFECTS of any nature are noted at the time the inspector does the inspection, and at the time both agents do a VISUAL PROPERTY INSPECTION. Because a property may be on the market longer than six months, we do not have the seller complete and date all their DISCLOSURES until we have an accepted offer. The seller then has (usually 5 days) to prepare and send all their disclosures to the buyer. A defect could actually be a very small paint chip on a door jam, or anything major that is quite obvious, like a missing closet door. The defect is in the "eye" of the beholder!" LOL

May 18, 2015 10:48 PM #49
Rainmaker
241,132
Sarah, John Rummage
Benchmark Realty LLC, Nashville TN 615.516.5233 - Nashville, TN
Love Being Realtors® in the Nashville TN Area!

We don't have that section on our TN MLS. But you are right that all houses have defects. A recent buyer of a new home from a reputable builder is getting 'defects' fixed one by one, so even on new homes there are defects. For instance,  the garage door opener had a 'ghost' so that sometimes it closes and sometimes not. The brand new HVAC unit had a part go bad almost immediately. The seller should be as truthful as possible on the property disclosure form. Better too much info than too little.

May 18, 2015 10:58 PM #50
Rainer
140,315
Keith Whited
RE/MAX Gateway - Alexandria, VA

There is not a 'Defects' in our local listing service. In Virginia we do have a 'Property Disclosure' which contain a blank area where sellers can list defects however it is nearly always left blank. Trying to detemine which 'known defects' are significant enough t add to a list is far to arbitrary.

Is chipped pain on a baseboard a defect?

Yes. Is it worthy of listing? No. But not every purchaser (or overly ambitious attorney) might agree.

May 19, 2015 12:36 AM #51
Rainmaker
393,972
Warren Schutt
Warren Schutt Real Estate - Danbury, CT
Helping People with Their Moves for over 36 Years

A defect? Not in my eyes!

I consulted with a couple in their 80's recently who were considering selling their home of almost 60 years. As they showed me their home, I asked about the moisture in one corner of the basement. The owner said, yes, we used to have a lot of water come in and it would flood the basement when there was a very strong rain. He then explained how, about 25 years ago, he had gerry rigged a solution so that now there was only some occaisional moisture.

Is there a defect? Not in his eyes! He fixed the problem to his satisfaction.

How do you argue with that thinking?

May 19, 2015 01:01 AM #52
Rainmaker
656,472
Bill Reddington
Re/max Southern Realty - Destin, FL
Destin Florida Real Estate

Don't hsve a known defects in our MLS listing. I do attach the sellers disclosure to MLS. Usually the first question if a buyer is interested in the home.

May 19, 2015 01:43 AM #53
Rainmaker
1,087,065
Greg Nino
RE/MAX Compass, formerly RE/MAX WHP - Houston, TX
Houston, Texas

Hi Warren #52,

60 years?!?! Good God. I don't know how the walls didn't start to close in after about 15. He could have paid that house off, did a cash out refi and then paid it off again! I guess you can't. He's "fixed it." 

May 19, 2015 02:27 AM #54
Rainmaker
1,087,065
Greg Nino
RE/MAX Compass, formerly RE/MAX WHP - Houston, TX
Houston, Texas

Christi #41,

 

It's great. The market is wonderful and the economy is robust. I wish we could give some (MOST) of this damn rain to California. Jeez. It won't stop!!!

May 19, 2015 02:29 AM #55
Rainmaker
537,007
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

This is a hot topic!  In our area, the seller is supposed to disclose any known defects on the disclosure.  Some sellers are honest, some aren't.  It is a difficult term to describe

May 19, 2015 04:17 AM #56
Rainmaker
600,191
Carolyn Roland-Historic Homes For Sale In Delaware and S. Chester County PA
Patterson-Schwartz Real Estate - Wilmington, DE
Carolyn Roland, GRI, CRS

In DE and PA, the seller fills out a multi-page disclosure at time of listing. Agents are NOT to fill it in for them! They fill it out to the best of their knowledge (hopefully not with fingers crossed behind their backs). And there is nothing on the MLS about "known defects, " but  agents are supposed to attach a copy of the Property Discosure to the MLS listing.

May 19, 2015 05:50 AM #57
Rainmaker
940,685
Thomas J. Nelson, Realtor e-Pro, CRS, RCS-D, Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

Transparency & disclosure keeps you out of court. I typically upload whatever is on-hand: reports & disclosures as the listing goes. These days the go so quick the ink hasn't had time to dry though :)

May 19, 2015 10:39 AM #58
Rainmaker
1,270,638
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

I concur with Jan Green on this one.  When I list a property I get the seller to fill out the SPDS - Seller Property Disclosure Statement. 

May 21, 2015 03:57 AM #59
Rainer
133,134
Deleted Account
Fort Myers, FL

To my knowledge, as it shows on here that most states don't have "no known defects" as an option on their MLS.  I think that is for a good reason, what might be a defect to one person, would not be to another.  Also, with some homes, the list of defects on a foreclosure home might take 7-8 hours to document.  I don't consider a 2 inch cut in a screen a defect, however, someone might say it is.  This is why an option for "no known defects" should not be on the MLS. 

I think a seller's disclosure should be required on every MLS listing.  However, the agent needs to make sure the disclosure in filled out properly.  I had a seller's disclosure where the seller marked "don't know" on everything, including the question, "Was the home built prior to 1978?"  An agent should not be able to take that listing, so the seller would be forced to fill out one properly.

May 21, 2015 07:14 AM #60
Ambassador
917,457
Frank Rubi
Frank Rubi Real Estate, LLC - Metairie, LA
FrankRubiRealEstate.com

Greg Nino Here in Louisiana its mandatory for the Seller to disclosure. We then in my market upload and place on the MLS. In addition, as a safety precaution we have the Sellers fill out the Property Disclosure. This we hope will stop a Seller from saying we told the agent and they (the Agent) did not disclose. 

May 21, 2015 10:34 AM #61
Rainmaker
798,769
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Greg - We don't have those fields on our MLS, and I am kinda glad we don't. We rely strictly on the 7 page Seller Property Disclosure Statement.

May 21, 2015 02:37 PM #62
Rainmaker
1,034,488
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Locally in CA "contractor special", needing "TLC" is about all I have seen.  They often lead to more serious defects....

May 22, 2015 12:49 AM #63
Rainmaker
1,523,673
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

Sellers are required to disclosures that materially affect the value of the property and not readily seen... Most often the known defect is just a blind seller!

Jun 12, 2015 05:38 AM #64
Rainmaker
1,560,731
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

HA!  I just had this conversation with a client this morning.  I delivered them the Sellers' Disclosure and said "It's not worth the paper it's written on"   Why?  Well, because when there is an "UNKNOWN" box to check off . . . what's the point??  "Has the roof leaked?" and seller checks UNKNOWN.  LMAO.  How can anyone prove another's KNOWledge of a particular issue/defect.  You can't.  That's why you get the home inspected and negotiate the repairs. 

Mar 06, 2016 05:31 AM #65
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Greg Nino

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