QUESTION: I’m selling my house. What do I need to disclose to potential buyers?
The time has come to sell your home. You’re working with your real estate agent, getting your house cleaned up and ready to sell, and looking for your next home. But, as the offers start rolling in, what types of information about your home are you required to disclose to potential buyers?
Not so long ago, the world of residential real estate was “buyer beware.” But, in more recent years, sellers are being held legally responsible when they don’t disclose a major flaw that they have material knowledge of, and the buyer later discovers the flaw and wants restitution. In fact, 75% of real estate agents who took the National Association of Realtors’ Legal Scan survey said that this issue is among their top three current and future issues, and growing.
Obviously, the laws can vary significantly from one state to another, there are some issues that, if you have knowledge of, should always be disclosed to a potential buyer, including:
- Repairs. Disclose any repairs you’ve made to the roof, plumbing, electrical, heating and air conditioning, or foundation. Include any repairs that you are aware of that were done by previous owners. Also include any maintenance that needs to be done on a scheduled basis and is unique to your property.
- Water damage. Any water issues must be reported. Some common issues include a leaky roof, flooded basement, dampness, and prior mold treatments.
- Rodents, Termites and other pests. Although not a common problem here in the Pacific NW, termites can be one of the most common hidden issues in a home in other parts of the country. Let the potential buyer know how many times you’ve treated your home for termites, rodents or other pests / insects, and when the most recent treatment was.
- Lead. Federal law requires that all homes built before 1978 must disclose any and all knowledge of lead-based paint in the home. This is one of the strictest federal laws as it relates to seller disclosures, and penalties are steep. Additionally, you’re required to give the buyer a 10-day period to do lead testing before closing. Here in the our Seattle Area market this is done on a Lead Based Paint Disclosure Form, also known as a 22J.
- Natural hazards. In some states, including California, sellers are required to tell potential buyers if the home is susceptible to specific natural disasters, like wildfires, mudslides, or floods. Here is the NW, homes near riparian waterways (i.e. rivers and creeks) are often considered flood zones.
- Infamous past. The laws on this fall into a gray area, but if your home was the site of criminal activity, someone died inside, or even if your home has a historical designation that would limit a new owner’s ability to renovate, most real estate agents recommend that you disclose this type of information to potential buyers.
- Issues that arise AFTER you are in contract with a buyer. Keep in mind your obligation to disclose continues until the home closes in escrow, so for example if your dishwasher leaks and causes damage to the flooring and cabinets a buyer would be obligated to provide an amendment to the Form 17 - Seller Disclosure Form. Keep in mind, the process for repairs or corrections would be need to be agreed to by all parties and each situation will vary.
The bottom line is this: You should always disclose issues that could significantly lower the value or desirability of a home. Laws and standard practices do vary state by state, so make sure to ask your real estate agent what’s required in the area where you live. And, even if you’re listing your house “as-is,” you don’t get to bypass disclosure laws. Selling a home “as-is” just means that you’re not willing to negotiate the price of the home based on any deficiencies.