Regardless of whether you’re selling or buying a home, disclosures will be a key part of your real estate transaction. In most parts of the country, sellers are required to document any known defects in a home to potential buyers. Given that successfully managing the disclosures stage is an integral component of the home-buying and selling process, you’ll want to make sure you’re knowledgeable on what a disclosure is, what it does, and when you’ll receive it.
Here are five things you need to know about real estate disclosures:
What is a disclosure?
Disclosure statements are a buyer’s opportunity to learn as much as they can about a particular property and the seller’s experience in it. Disclosures range from work done without the benefit of a permit to knowledge of leaky windows and everything in between, and they not only serve to inform buyers but to protect the sellers from future legal action.
How does one make a disclosure?
Disclosures typically come in the form of boilerplate documents where the seller answers a series of yes/no questions about their home and their experience there. Sellers must also present any documented communication about a substantial defect or item which has the potential for adversely impacting the home’s value.
What does a seller disclose to a potential buyer?
Buyers should cross-check the seller’s disclosures with the city building permit and zoning reports, because work completed without a permit or approval by municipality might not have been performed to code (which could result in a fire or health hazard). Other standard disclosures include the existence of pets, termite problems, any history of property line disputes, neighborhood nuisances, and so on.
How does a disclosure differ from an inspection?
A disclosure is something given to the buyer by the seller, documenting the seller’s knowledge of the property. An inspection is usually conducted by a third party, physically reviewing the property to reveal defects that the seller might not have been aware of. The buyer should always do an inspection before moving forward with the purchase. Sellers often hire a property inspector before going on the market and then submit copies of the written report to would-be buyers in the interest of full disclosure.
When does the buyer receive their disclosure statement?
Disclosure documents are provided to the buyer once the seller has accepted their offer (at least in most markets). The buyer always has the opportunity to review the seller’s disclosures, and if said buyer discovers something negative about the property through disclosure, they can usually back out. Smart sellers let buyers know everything they need to know up front, which saves everyone time, hassle and expense by preventing deals from falling apart in escrow.
Source: Zillow