Disclosure – what do sellers and salespeople need to disclose?
How to Use a Real Estate Disclosure Form
Real estate disclosure forms are used when a property owner sells a house or land to a buyer. Most states require the seller to disclose any problems or defects in the house that might have a negative effect on its value or appeal. The disclosure laws vary by state. California is known to have the strictest disclosure requirements, but most states require sellers to disclose only the information they know about before selling a home or property. Use a real estate disclosure form when you are buying or selling, to check off the items that the buyer must know about the home before closing on the transaction.
Using a Real Estate Disclosure Form as a Seller
Talk to your agent about any known defects in your home.
- Be up front and honest so your agent can sell your home truthfully. For example, if your basement floods during periods of heavy rain or your roof leaks, your agent needs this information.
Obtain the disclosure form that your state requires.Many states have 1 specific form that sellers must use to disclosure any defects when selling property.
- Ask your agent for the disclosure form, or get it from your state department of real estate or city planning department.
Fill out the disclosure form completely and truthfully.It is illegal and fraudulent to conceal any known defects.
Get an inspection.While not all states require an inspection before the disclosure is made, it is a good idea to have one completed.
- Use the inspection report for purposes other than the disclosure. It can help you set the price of your home before you put it on the market, and might help you decide which repairs to make before you sell.
Give a liberal disclosure.Always lean towards disclosing, even if you are in doubt about whether it is necessary. This will protect you legally and demonstrate your honesty to potential buyers.
- Remember that disclosing a problem does not require you to fix it.
Using a Real Estate Disclosure Form as a Buyer
Ask for the disclosure form when you visit the property.
- Find out how soon you can get a copy of the disclosure form if it is not available at the viewing. Having the form is important for your knowledge and to help you negotiate a price if you decide you want to buy the house.
Review the disclosure form for known defects.
- Look for major physical problems such as construction defects, structural issues, problems with leaking and flooding and potential issues from lead paint, plumbing or electrical hazards.
Determine whether an inspection was conducted.You will likely have your own inspection done, but if one was completed recently, you can be sure you are looking at an accurate disclosure of defects.
Ask your agent to negotiate what will be fixed.
- Decide what you will insist on. For example, if termite infestation is disclosed, you might not want to buy until that is cleaned up. If asbestos is disclosed, you might ask to have that eliminated before you buy as well.
Use whatever will not be fixed on the disclosure form as a negotiating tool in your offer.
- Make an offer that accounts for defects in the disclosure. For example, you could offer less than the asking price because you know you will have to replace the roof in 2 to 3 years.
Video: Seller's Disclosures - California Association of Realtors Disclosures
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