Sellers often approach disclosures with dread. Agents should advise them on the many benefits of disclosure, from building mutual trust to offering legal protection.
In early summer 2021, the real estate market is moving fast and inventory is low. It is a classic sellers market. According to the National Association of Realtors (NAR), The median price of a single-family home in the United States increased 18.4 percent to $ 334,500 compared to the previous year.
Both the percentage increase and the price are historical highs and reflect the massive demand for housing throughout the country. Sellers in this market often receive multiple offers well above the asking price. With this dynamic, both sellers and agents may not follow certain standard processes, such as those related to disclosures.
While disclosing your real estate defects is not just the ethical and professional way to conduct business, it can also benefit sellers financially. It allows them to avoid costly legal disputes, especially since most homeowners policies will not cover claims of nondisclosure, as the omission is not usually “accidental. ”
Over-disclosure can disarm buyers with the seller’s honesty and attention to detail, making them more comfortable bidding that could be $ 100,000 above the asking price. It would be beneficial for agents to reduce their sellers’ fears of disclosure by detailing how disclosure expedites a sale and prevents future problems.
Frequent disclosure omissions
Sellers and agents should always consider any “known material facts” about the property that may adjust its perceived value. If the answer is “yes,” then the issues should appear in the disclosures. And for state specific information, agents should always understand the latest requirements.
Unfortunately, homeowners are often aware of flaws and problems they want to ignore. This is common for defects like slow leaks in the pipes that can remain hidden for months or even years until the new owner discovers a big problem.
However, a known issue requires full disclosure. Here are some of the problems that are not often revealed:
- Sewer line backs. Whether caused by tree roots, old or broken pipes, or poor design, sewer line problems are a headache for new buyers.
- Roof age or condition problems. Sellers should transparently share the age of their home’s roof (if known) and detail any known issues, such as holes or damaged shingles / shingles.
- Cracks in the walls or foundation that may suggest structural problems.
- Current pest problems, such as rats in the attic, widespread termite damage, or other related problems.
- Plumbing leaks or water damaged areas.
- Appliances are a frequent stumbling block to home sales. One option for sellers is to omit the appliances from the sale and then sell them separately. If appliances stick around, sellers must disclose all problems, no matter how minor. It is often better to sell the house without any appliances included and then declare that they will remain for the owner but without any guarantee of their working condition.
When it comes to any of the above issues, it is in the seller’s best interest to disclose them. A reasonable buyer will not give up a home because of past water damage from a burst pipe. However, if they find evidence of undisclosed damages, then they could rescind your offer or resort to legal recourse.
Reveal unauthorized work
Owners must disclose illegal work – even in cases where the quality of the work is fantastic and it would pass a code inspection. The seller’s agent must ensure that any unauthorized construction that increases the bedrooms, bathrooms, or square footage of a property is not listed in the MLS description.
You may notice the existence of this space, but the indicated size of the house should reflect what was also recorded with the city appraiser. A proactive step for sellers is to update the city on the new square footage before the home goes on the market.
With this update will come additional property taxes, but it is a best practice for transparency and building trust with buyers willing to pay the best price.
Disclosures must indicate work performed without permits, and the agent must encourage buyers to conduct their own inspections to review the work. Vendors must also refrain from claiming unauthorized work is “code compliant,” even if the contractor performed code-compliant construction.
Eliminate fear of disclosure to build trust
Sellers (even those in a friendly market) often approach revelations in awe. They worry that if they disclose everything that is wrong with their home, they will not attract buyers. Agents can advise their sellers on the benefits of disclosure, including building mutual trust and legal protection.
Buyers in a competitive market are unlikely to be swayed by leaky faucets or an aging ceiling. Instead, they will appreciate the transparency and attention to detail with full disclosure and will go ahead with an offering that satisfies all sides of the equation.
Jenny Usaj is the recruiting agent and owner of Usaj Realty, a Denver, CO real estate agency. Jenny is a member of the Denver Metro Realtors AssociationMarket Trends Committee.