Fix It, Then Disclose It
REAL ESTATE PRACTICE, TIPS FOR SELLERS
September 16th, 2009
Many home sellers get their home ready for sale by fixing, painting and replacing worn out items to get the best possible price. After all, many real estate professionals encourage their clients to do just that prior to placing a home on the market for sale. However, some sellers believe they do not need to disclose what repairs or alterations were made.
In reality, failure to disclose material facts about the property known to the seller is the basis for most lawsuits brought by homebuyers. The confusion arises in some cases because the seller corrected a problem and feels there is no need to disclose it to the buyer. However, a buyer should be made aware in writing all repairs and remodeling completed by seller and previous owners if known, so the buyer can ask questions or have their inspectors examine these areas more closely.
A case in point related by Dian Hymer, a San Fransisco real estate broker, is a seller that converted a basement to a den just prior to placing the home for sale. The home sold and low and behold the first time it rained, the basement flooded and all the improvements had to be demolished and removed. Yes, the seller was sued and the buyer won. The critical line crossed here was concealment after fixing up. The seller knew the basement flooded and not only withheld that fact, but added significant improvements to garner a better price which came back to bite him or her.
One form in the Realtor’s tool box to help avoid such disclosure issues is the Seller Property Questionnaire. This form goes above and beyond the state required Transfer Disclosure Statement by asking more in-depth questions of the seller. It asks 44 questions including if:
- Any part of the property was painted in the past year (covering stains from roof leaks?)
- Any water intrusion problems (mold?)
- Any pets inside (soiling the carpets?)
- Any repeated maintenance calls (clearing the sewer line of roots?)
- Any lawsuits (past or present-what was the dispute over?)
This form jogs the seller’s memory so they can disclose any past problems that a buyer may want to examine more closely. My experience has been that sellers forget about a problem because they have become accustomed to living with it, or have fixed it and forgot it even existed. This form reminds the seller of all aspects of the property which may be of interest to a prospective buyer. If a seller has to ponder if something should be disclosed, disclose it! Better safe than sorry.
Other things sellers can do to avoid disclosure problems:
- Take before and after pictures of any remodeling projects
- Have professional inspections done prior to placing the home for sale
- Keep records and/or receipts of repairs or replacements and provide to buyer if requested
- Attach extra sheets of paper if the forms don’t have adequate space to explain your answers
- Consult with your real estate agent or attorney for guidance on filling out disclosure forms
Some sellers are concerned disclosing material facts will scare buyers away. In reality, buyers would prefer knowing as much as possible about a property they are considering even if the seller thinks it’s problematic. Error on the side of over-disclosing, even if it scares a buyer away. Sitting across the table from a plaintiff’s lawyer is not where you want to be after selling a home!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
