Wednesday, 21 November 2018
Agent Resource Center
This Old House - Do-it-Yourself

Full Disclosure in Real Estate: Know the Requirements

Written by Posted On Thursday, 23 August 2018 06:41

A prospective home buyer naturally wants to learn as much about a property of interest as possible. To that end, it is up to the real estate agent to be forthcoming about any defects or issues that he or she is aware of. Doing so can help both buyers and sellers more accurately assess a home’s value, compare costs and simply know what they’re getting into before they sign on the dotted line.

 

Yet, one of the most common questions that professionals in this industry face is “How much am I required to disclose?” The short answer is simple. If there are known hazards on the property, your real estate agent or broker must disclose those at the beginning. If there are any other factors that will directly affect the home’s price, those must be disclosed as well. Moreover, if it is an issue that may affect someone’s decision to buy a home, it must be mentioned. Let’s discuss the hazards category first.

 

Disclosing Known Hazards

There are some hazards that can make a home unlivable or unappealing to interested parties. Under law, if you are selling a home built before 1978, you must disclose any presence of lead-based paint. From there, each state takes its own stance on how much real estate agents must disclose, but there are several conditions that most can agree upon. For the most part, you’ll be required to disclose if any home has a presence of mold, termites or other pest control issues.

 

You’ll also need to note any structural defects, as these could be costly to repair and unsafe to leave as they are. For instance, if there are roof or foundation issues, these must be made clear at the beginning so buyers can more accurately estimate their overall costs. Other significant issues to note are any sewer or plumbing concerns or natural hazards, such as being located near a flood zone.

 

Most of these disclosures will be required to be made in writing. While the known hazards are prominent and should be made public knowledge, it is not your task as the agent to go actively searching for unknown hazards. If you suspect an issue, however, it is important to speak up, as even the smallest detail could play a big role in the overall buying decision. For instance, if you know that the home’s HVAC system is on its last leg and will need to be replaced in the next few years, you may want to go ahead and let any interested buyers know that. It also helps to learn more about some of the most common issues homeowners face with these units, so they can prepare themselves for any other complications down the road.

 

Disclosing Known Information

In addition to disclosing any defects or hazards associated with the house, real estate agents are also required by law to make all parties aware of any information they receive that may affect the sale of the home. For example, buyers should be privy to the other offers currently being made on a home and should also know how long the home as been sitting on the market. Or, if a buyer is willing to increase the price paid on a home, the agent should relay this information to the seller. Along the same lines, if the seller is willing to lower the price of the property, this information should be shared with interested buyers.

 

Other less concrete but still valuable points of knowledge include whether the agent has any conflicts of interest with a property, whether there are counteroffers presented, and any updated estimates on the property’s value.

 

The Importance of Full Disclosure

Ultimately, it is in your best interest as a real estate agent to disclose as much about a property as possible. While you might think it will derail a sale to make issues or defects known, in reality, it could be much worse if you keep that knowledge to yourself.

 

In fact, if a buyer obtains a property without full disclosure and ends up acquiring damages, he or she could file a lawsuit to recover any money lost in the process. From lost profits and repairs to pain and suffering, there are myriad negative situations that could occur from a failure to communicate. Thus, go ahead and be as transparent as possible. Doing so helps you maintain your integrity as an agent and helps you build a reputation as being both trustworthy and honest. In the long run, that kind of character will pay off far more than any lost sale is worth.

Rate this item
(0 votes)

Agent Resource

How to capture your next prospect - click here

Realty Times TV

View More

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.