With all the decisions a seller has to make, deciding what information to disclose to a prospective buyer may not seem like a big deal. However, the area of seller disclosure, if not handled properly, can come back to haunt a seller long after the sale has been finalized.
Disclosure statements, which can come in a variety of forms, are the buyer’s opportunity to learn as much as they can about the property and the seller’s experience in it.
Potential seller disclosures range from knowledge of leaky windows, to loud neighbors, to information about a major construction or development project nearby. Not only do disclosure documents serve to inform buyers, they can protect the sellers from future legal action. It is the seller’s chance to lay out anything that can negatively affect the value, usefulness or enjoyment of the property.
If your personal motto is “buyer beware,” you may want to rethink that issue just a little. Even selling a home “as is” requires the seller to disclose all known defects. It is important to note that when it comes to disclosing a problem, the key word is “known” defects. This also is the biggest problem for a buyer who decides to go after the seller and/or real estate agent for compensation resulting from a problem down the line. In other words, a seller could legitimately be unaware of serious problems like a cracked foundation, termites deep in the walls, or a roof on the verge of leaking. Under those circumstances, in most cases, the seller wouldn’t be held responsible.
So, what is a reasonable way to handle seller disclosure? Here are three suggestions all sellers may want to consider:
1) Disclose all known defects in writing. The recommended process in Colorado is for the seller to complete a Sellers Property Disclosure Form which is a Colorado Real Estate Commission approved form that asks the seller about appliances, electrical/plumbing/heating systems, roof, site conditions and known easements and encumbrances. The buyer receives a copy of this form that reflects the seller’s best current knowledge about the home. Common sense tells us that disclosing major home problems is wise ,even if the problem has been fixed. The decision to disclose the smaller problems that have been repaired is one best handled on a one-on-one basis with a real estate professional.
2) Hire a real estate inspector to conduct a comprehensive analysis of your home. This formal report can then be shown to prospective buyers. If your home gets high marks, the report becomes a powerful sales tool. If you discover problems, you can fix them or negotiate them into the terms of the contract.
3) One of the best ways to protect yourself is to work with an established company and a real estate professional. With experience and expertise on your side, you’ll get the kind of guidance it takes to make an informed decision. As always, please don’t hesitate to call if you have questions about this or any other aspect of our Colorado real estate market.