While a home listing and walkthrough can provide buyers with a lot of information, they may not include all of the things a potential buyer should know. In most states, a seller’s disclosure is required to disclose any relevant details about the home’s recent history.
Seller’s disclosures are the buyer’s resource for getting the full picture of a home they may be interested in. It helps them make informed decisions before fully committing to a home. Here are 5 things to know about property disclosures:
1. The Basics
What is a real estate disclosure?
Real estate disclosure statements can come in a variety of forms. They are the buyer’s opportunity to learn as much as they can about the property and the experience the seller has had in it.
Items on the disclosure can range from a leaky faucet to information about a nearby construction development. These disclosures serve to inform buyers and protect sellers from any future legal action. It’s the seller’s chance to reveal anything that can negatively impact the home’s value.
How does a seller make a disclosure?
Disclosure laws can vary from state-to-state, and even on the city or county level. Disclosures typically come in the form of boilerplate documents where the seller can answer a list of yes or no questions about the home and their experience in it.
Sellers must present any documented communication about a substantial defect or item that could have a negative impact on value. This communication can be between neighbors, previous owners, their agents or the previous seller).
What do sellers typically disclose to potential buyers?
Previous upgrades or renovations completed by the seller are typically disclosed. Work done with or without permits is also typically disclosed.
Buyers may want to cross-check the seller’s disclosures with the city/county permit and zoning reports. Work completed without a permit may not have been completed to code, which could result in a health or fire hazard if not double-checked.
2. Disclosures are not the same thing as inspections
The disclosure documents the seller’s knowledge of the property. This is not the same thing as an independent inspection by a third party. It’s important to get a professional inspection, because it may reveal problems or defects that the seller may not have been aware of.
An inspector checks all systems and components of the home. Often, a seller will hire a property inspector before going on the market and supplies the report to the buyer. This provides the ultimate full disclosure for the potential buyer.
3. Seller disclosures vary from state-to-state
Regardless of where you live, there are three general categories that your area’s seller disclosure requirements will fall into:
- Full Disclosure: These disclosures require a very thorough account of the home’s current condition and recent repair history. These are typically several pages long and ask in-depth questions about things like roof age, roof repair history, basement leaks or repairs, and homeowners association fees.
- Disclosure-Disclaimer: This gives the seller a choice between completing a full disclosure form or simply providing a disclaimer. The disclaimer is often one question that asks if the home has had any latent defects known to the seller.
- Caveat Emptor: Some states apply the rule of “caveat emptor”, which is Latin for “buyer beware.” This puts the burden of discovering flaws and repair issues on the home buyer. These laws are designed to protect the sellers from litigation if the buyer experiences buyer’s remorse after discovering a problem they should have discovered before closing on the property.
Be sure to find a REALTOR® that can provide you with accurate information on how disclosures work in your city or county.
4. Be aware of these common disclosures
- Nuances in the neighborhood: This can be noise or odor from a source outside the property that could be an annoyance to a potential buyer. You may want to check on your state laws regarding this type of disclosure, because nuances can definitely change the way you see a property.
- Homeowners association information: If the home is governed by an HOA, sellers should disclose that fact. These associations generally impose monthly fees on homeowners and may have rules that the potential buyer may not want to deal with.
- Hazards: If the home has potential health hazards, like asbestos or lead paint, the seller should disclose that. Or, if the home is located in an area where there’s an increased risk of natural disaster, like flooding, the seller may be required to disclose that information, as well. If these things are not listed in a disclosure, you may want to add it to your list of questions to ask.
- Water damage: When water gets in where it shouldn’t, it can cause multiple issues, like damaging personal possessions, the home’s structure, or mold growth. However, there are some instances where water leaks may not present themselves until weather or seasons change. If these problems don’t exist in the weather or season that the inspection took place, the buyer may not know about them until it’s too late.
5. Review the document with a local real estate agent
Consider going over these documents with a REALTOR® or real estate attorney. Either of these professionals will be working with your best interest in mind, so they will be able to point out any red flags you may not have noticed.
They’ll also be able to define relevant terms & explain what each disclosure means. You can even get an idea of the future cost or work that certain issues may point to.
Team Melton is ready to help you with the home buying experience. Our team of professionals has over 50 combined years of real estate experience to assist you through every step of the process.
Contact us today to get started on your search for homes for sale in Evansville or homes for sale in Newburgh!