Whether you are looking to buy a property or sell one, real estate disclosures are essential in any real estate deal. Before listing a property on the market, improving how it looks is a critical aspect of preparing for a property sale. The intention is to display your property in its best form to improve the chances of selling it.
Sometimes, sellers paint and work on home improvements in an attempt to cover up a negative aspect of the home. In most cities and states, real estate owners are expected to report any defects with the house when they want to sell the property. Some sellers do not report these malfunctions because it may affect the value of their property. They will try and use home improvement methods to cover up these issues in the hope that a potential buyer will not notice until they close the deal. This is why real estate disclosures are important. Here is what you need to know about them:
What Is A Real Estate Disclosure?
A real estate disclosure is a report that indicates a property’s malfunctioning parts and any previous significant repairs. This document serves to educate the buyer on the actual condition of a property which informs their buying decision. A real estate disclosure also protects the seller from future legal action. It is the responsibility of the seller to report any issue that affects the value and usefulness of the property.
How Does A Seller Make A Disclosure?
The laws that govern real estate disclosures vary from one state to another. California is the state with the strictest disclosure requirements. To make a disclosure, the seller is required to fill out boilerplate documents where they answer yes/no questions about their property and their experience living there.
Additionally, a seller is expected to document substantial defects that affect the value of the property. Depending on the state, sellers may be held legally liable for the disclosures they make or fail to make for up to 10 years. As a seller, it is best to disclose all of the details about your property. Hiding certain aspects can prove to be a problem in the future in the form of lawsuits.
What Does A Seller Disclose To Potential Buyers?
A seller is supposed to disclose previous improvements, upgrades, and renovations done to a property. They should also disclose whether the repairs were done with a permit or not. As a buyer, you can cross-check the disclosure information through the City Building and Zoning Reports. This ensures that the work done meets the requirements to avert a health hazard or fire hazard.
Are Real Estate Disclosures The Same As Inspections?
A real estate disclosure is an independent document of the seller’s knowledge of the property. It is in no way similar to an inspection done on the property by a third party. An inspection is an exercise meant to discover current defects in a property, some of which the owner may not have been aware of.
On top of a real estate disclosure, the buyer should also perform an independent inspection on the property before buying.