What Are Non-Disclosure States?

Posted On Wednesday, 07 April 2021 23:23

There used to be a large signage in front of the lovely home across your house that said it was ‘for sale.’ It had been there for several months. But, lately, you haven’t seen that signage. It’s been quite a while, but you don’t recall when they took it down. You’re curious for how much it was sold so you look it up online in one of those real estate websites.

If you live in a non-disclosure state, you won’t find the sale price you’re looking for because real estate transactions aren’t allowed to be disclosed to the public through general listings, such as websites. The current list of non-disclosure states includes Wyoming, Utah, Texas, North Dakota, New Mexico, Montana, Missouri (some counties), Mississippi, Louisiana, Kansas, Idaho, and Alaska. 

If you want to know for how much your neighbor’s house was sold, you’ll have to ask those directly involved in the transaction. Your other recourse would be to hire the services of a real estate professional to get the information for you. You can go to the county assessor, but they might just shrug their shoulders and show you the door.

Living In Non-Disclosure States

Living and working as a real estate professional or investor in a non-disclosure state poses certain challenges and difficulties not faced by those in disclosure states. To give you a clearer grasp of how real estate transactions differ in non-disclosure states, continue reading this article. 

Disclosure And Non-Disclosure States

The main difference between disclosure and non-disclosure states is that local assessor and mortgage authorities can divulge to listing and appraisal websites the actual sale prices of real estate properties that were recently sold. In fact, they can show them to any person who isn’t even remotely involved in the transaction. They can post them anywhere.

In disclosure states, the sale price is automatically reported when the sale of a real estate property is recorded. This report can be accessed by anybody, including your favorite popular real estate listing websites. Other real estate brokers and agents, including other third parties, who had nothing to do with the sale can ask for the sale price. 

By contrast, in non-disclosure states, the seller has the option whether or not to report the actual sale price of a real estate property. If the seller opts to report it, they’d become part of public record. But, if the seller or buyer, or both opt not to make it public, then county employees can’t send it out to public or online listings.

Of course, the seller and the buyer, as well as all the other people involved in the transaction, such as the investor, broker, or agent, can still divulge it to other people or talk about it among themselves. They can even write about it in their own listings or blogs. The key difference is that county employees who saw the documents about the real estate transaction are prohibited from divulging the sale price to any third party, including real estate listing websites.

Even if those involved in the transaction disclosed the sale price to the county employees, this doesn’t give them the authority to make such information public. Even some real estate practitioners don’t get this right. Only county officials and staff who saw the sale documents when they were submitted are barred from disclosing the sale price. If such information is subsequently obtained by other people, they’re not covered by the same prohibition on disclosure.

Actual Sale Price And Comps 

The actual sale price is important because real estate investors and buyers compute for the price of similar properties based on actual sale prices. This is the only way they can come up with an accurate and realistic price of what they’re going to sell or their offer to buy a property. 

To come up with a realistic offer to buy, investors need to know the comparable sale prices (comps). It’s a core component of their method of arriving at a realistic price to buy or sell properties; otherwise, real estate properties would be based on whatever amount they feel like.

Multiple Listing System (MLS) 

In non-disclosure states, you can still find the actual sale price by searching the Multiple Listing System (MLS). It's a database containing records about the actual sale prices of real estate properties within a state or a specific region. To be able to do so, you’d need to either have access to the MLS yourself or know someone else who does. But, you should be willing to pay for the annual MLS fees.

If you don’t have access to the MLS and don’t know anybody who does either, then your next option would be to go to the county assessor office and ask for the records yourself. This is quite impractical and you’d be better off hiring a real estate professional to help you.

Searching In Non-Disclosure States 

Life as a real estate investor or professional in a non-disclosure state can be quite different and challenging compared to those living in disclosure states. For one, it’s not that easy to look for information intended not to be disclosed. But, the actual sale prices are crucial to pricing, so you have to do it anyway.

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