Detailed disclosures protect both seller and buyer
Disclosures are more important than ever when it comes to real estate. Take these past few stormy weeks – we have had three calls hoping to determine whether the disclosure statements on individual properties could have prevented or provided insight to three different water-related issues. Being completely honest when selling your home is not just the right thing to do, it’s California law. And it also makes a real estate transaction more cohesive and final.
To disclose means to make information known, and a real estate disclosure statement does exactly that -- it allows potential buyers to become objectively aware of the overall condition of the property.
Disclosures allow both the seller and buyer to enter an agreement with all cards on the table and it actually protects both parties. A buyer can review the disclosure packets prior to placing an offer on a property. The buyer can review the docket and see if the property is in the right condition for that buyer. In our experience, these disclosures also allow us, the real estate professionals, to identify good properties to show and to give advice on things to update or prepare for.
In California, sellers are required under the law to disclose any defects or issues that could at all affect a buyer’s enjoyment and comfort on the property or the intended use of the property. When done correctly, this protects a seller from undue recourse, because the information was previously offered to potential buyers before entering contract.
So, what are some things to disclose? Certainly a leaky window, creak in a floorboard, a creak that routinely overflows during heavy rainfall, and even a refrigerator with a broken icemaker. It could also pertain to things that arise later like mold, insect problems, electrical issues or crime. Luckily in California, these items all come on a checklist form where sellers can add information when necessary.
Sellers should look at disclosure forms as protection. They should also recognize when filling out disclosure forms that no property is perfect. Revealing flaws doesn’t kill a deal – and in this market with little inventory – you’d be surprised what things people will deal with to own a home here. The more sellers disclose about a property, the more likely they are to close the door on it once the money is funded.
On behalf of buyers, honest disclosures allow a potential buyer to weigh their odds and see if the known issue could impact their use or enjoyment of a property. This is the same as trying on a pair of shoes with an honest saleslady that tells you that the shoe runs big or might be a bit heavy. Being the consumer, you weigh your odds. Chances are that you won’t be buying those heavy, six-inch stilettos if you are planning to use them to walk a few blocks to your office each day.
Accurate disclosures make the real estate process friendly on each end. A buyer knows what to expect and a seller can sleep at night knowing that the transaction was an honest and upfront one.
Want to know more? Happy to hear from you!