Property Disclosures | Tips for Buyers & Sellers

15 02 2011

Property Disclosures are important for everyone.  First and foremost, I’m sure you’re mom taught you to always tell the truth.  Right?  But is simply not mentioning something kinda important still telling the truth, because….after all, you haven’t lied!  Wrong.

In some states Seller’s Property Disclosure’s are mandatory.  In other’s they are not – like in Montana, for instance.  Does that mean you “get out of doing it” then?  NO.  Don’t think of it as airing all your dirty laundry for everyone to see…think of it as a way to share all the important things about your home to the buyer, who very well may never meet you.  Remember how long it took you to figure out the darn underground sprinklers/how to jiggle the toilet handle just right, etc?  Now you can be a “nice guy” and pass along the info.

Think of it this way….this is your opportunity to pass along all the great stuff you’ve done to the property (new furnace, new roof, new stove, new windows, new carpet), when you did it, and where they can find info (Pierce Flooring – Frieze in Sand, Stove from Sears in 2008, etc).  This stuff is all optional.  You don’t have to put any of it.

What you are obligated to include is anything that is considered an “Adverse Material Fact”.  In Montana, our Real Estate Forms define that as anything that will affect the value, the structural integrity, or be a possible health hazard.  I’ll take that one step further….if the nosy neighbor, who will UNDOUBTABLY come over and talk to your buyer/new owner at some point, mentions the-leaky-bathtub-that-flooded-the-basement-incident, you can only imagine how ANGRY the buyer/new owner will be that they were told nothing about it.  Moreover, they will wonder what else you’ve hidden from them.  The more they stew over it (most likely if they’ve already closed), the more likely you are to find yourself in a lawsuit.  SO.  Technically speaking, since you did redo your ENTIRE basement & it cost you $25,000 thank-you-very-much. AND, you fixed the stupid leaky bathtub that caused the problem to begin with….it doesn’t matter.  It’s better to just tell them up front on the Property Disclosure.

WHAT?  WHY? you, say.  Because most likely we will only be passing the property disclosure back and forth after we have an accepted offer on the property.  (Why on earth would you want to read the property disclosure of every house you look at?   It might be hideously ugly and therefore you’ve wasted time in your life reviewing something you didn’t end up liking anyway)

Most offers in the Billings area are contingent upon a homes inspection.  When a Realtor fills out your Buy/Sell, they most likely have also checked the box that says it’s also contingent on the sellers property disclosure, which is a subcatagory of the inspection portion (for the Montana forms).  After the Buy/Sell is negotiated, the next step is to order the homes inspection.  At that point, the buyer will be emotionally & financially invested in your property.  While it’s true not all buyers & sellers keep “sound mind” during a real estate transaction, most are reasonable & understanding to the fact they are not buying a brand new home.  They realize there will be “little things” just like in the home they grew up in/live in now.  Unless there is a major unresolved issue that comes up on either your disclosure or the home inspection (which would be an issue for most any buyer – not just the one you’re in contract with), we mostly sail through this negotiation phase.  Easy Breezy.  Mostly, anyway.

Basic premis of this lesson – it’s better to just be honest & put it on there than to have something blow up in your face & find yourself and everyone related in a lawsuit.  It will likely cost you MUCH more after the fact that if you just fixed whatever you might be tempted to hide in the first place.

What if you’re buying, not selling?  What do you need to think about? Is there a good way to “sniff out” issues?  The simple answer is no.  I’m sorry.  The best thing you can do is have an educated Realtor with you who knows what problems might be specific to your locale/neighborhood.

Realtors are in hundreds of homes on a regular basis….while we’re not inspectors, if there is something really “off”, we’re likely to mention it to you without you needing to ask.  Like…Hmmm…do you think it’s strange the entire basement has been renovated & nothing on the main floor has?  Maybe they had an issue we should ask about?  Maybe it seems like mold to us?  Or…I seem to remember a fire in a home in this neighborhood a few years ago & I notice this entire kitchen is brand new.  Maybe it was this home.  While you have to do you own due diligence, you can ask your agent their opinion/insight/knowledge.

You might be thinking, “Why would my agent tell me if they thought something was wrong?  They want me to buy the house so they can make money.”.  This is only true if you have a crappy Realtor who doesn’t care about you/their reputation/your future together as client/Realtor.  Think about it.  A Realtor’s viability as an agent rely’s so heavily on our reputation & credibility.  If this is the way your Realtor makes their living/pays their bills/feeds their family, most likely they have their morals intact.  It only takes one or two wrong/immoral turns to ruin a reputation.  Once that happens it’d be tough to pay the bills.

On the flip-side…in my world for example…I want to feel great when you call me to sell your home in a few years.  In order for that to happen, I have to be 100% forthright with you all the time (and as my broker has pointed out…honest & gracious are not mutually exclusive!).  Repeat/Referral business is the best way for us Realtors to make a living & if we mess that up, we might as well hang up the career.

Bottom line.  Always tell the truth & always hire an agent you trust.  Don’t know one?  Call me.  I can help find you one….even if you live half a country away.  I’ll do the legwork, you get a great agent.  It’s a win-win.

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20 03 2011
Why You May Not Want To Sign A Property Disclosure Statement | Barry-Hill Realtors

[…] Property Disclosures | Tips for Buyers & Sellers (katehamlin.wordpress.com) […]

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